Wage theft is all too common in California, and it is also against the law – but a dedicated California wage theft attorney can help. If your California employer fails to pay you in accordance with the law, it is considered wage theft, and there are legal protections in place that can help. The intentional theft of wages by employers is a serious problem in California and across the nation, and the financial effects can be devastating. While employer wage theft cases tend to be complicated, protecting your rights and your wages is paramount, and an experienced California wage theft attorney is standing by to help.
What Is Wage Theft?
At its most basic, wage theft refers to when an employer intentionally fails to pay an employee the amount they are owed. When you work for an employer, you are legally entitled to fair compensation, and California has careful laws in place that address this matter. California defines wage theft as failing to pay workers in accordance with the law, and they provide a long list of relevant examples that include:
- When employees are paid less than the minimum wage
- When employees are not paid bonuses or do not receive vacation pay as promised
- When employees don’t receive wages that were agreed upon with their employers, including overtime on commissions, on the piece rate, or on normal wages
- When employers take a share of their employees’ tips
- When employees are not allowed to take the meal breaks, rest breaks, or preventative rest breaks that are required by law
- When employees are not allowed to accrue or to use paid sick leave
- When employees are not paid bonuses or do not receive vacations as promised
- When employees are not paid premiums for split shifts
- When employers take unauthorized deductions from their employees’ paychecks
- When employees’ paychecks bounce
- When employers fail to reimburse employees for legitimate business expenses
- When employers fail to pay timely final wages
- When employers fail to provide timely access to either payroll records or personnel files
- When employees do not receive reporting time pay
If any of these apply to your situation, your employer may be engaging in wage theft, and seeking professional legal guidance is well advised.
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California's Latest Law
California passed a law that criminalizes intentional wage theft and applies to employers of all sizes. As such, an individual owner, a managing executive, or a manager of a business can personally face criminal charges related to wage theft. Further, the law establishes a grand theft threshold. If an employer is found to have engaged in more than $950 in wage theft from an individual employee or more than $2,350 from 2 or more employees over a 12-month period, they can face criminal charges of grand theft that come with serious legal consequences. This law extends its reach to employers of independent contractors, such as workers in the ever-expanding gig economy.
Employers can face up to one year in jail if the grand theft charge is brought as a misdemeanor and up to three years in prison if it’s brought as a felony, and there are also considerable fines imposed. California takes employer wage theft exceptionally seriously, and employers should, too.
The Minimum Wage
California’s imposed minimum wage is higher than anywhere else in the nation other than Washington, D.C., and New York City. The minimum wage that employers who have fewer than 26 employees must pay throughout the state is currently $14 an hour, but this minimum will rise to $15.50 an hour for all employers on January 1, 2023. Employers of 26 or more employees are currently required to pay a minimum of $15 an hour. Some California cities and counties impose their own minimum wages, but they must exceed those set by the state. The minimum wage applies to almost all employees in California. Some of the very few exceptions include:
- Outside salespeople
- The parent, spouse, or child of the employer
- Apprentices under the State Division of Apprenticeship Standards
There is also an exception for employees who are learning their jobs – with no previous related or similar experience – that requires payment at 85 percent of the minimum wage (rounded to the nearest nickel) during the first 160 hours on the job.
The Matter of Overtime
In California, overtime pay is a legal requirement. The general overtime rules apply to all nonexempt employees – employees who make less than a specific yearly amount and are, therefore, not considered salaried – and they include:
- Nonexempt employees are entitled to time-and-a-half pay for work that exceeds eight hours in any workday.
- Nonexempt employees are entitled to time-and-a-half pay for work that exceeds 40 hours in any workweek.
Additionally, employees are entitled to double pay in the following situations:
- Nonexempt employees are entitled to double pay when they work more than 12 hours on any given workday.
- Nonexempt employees are entitled to double pay when they work more than eight hours on the seventh consecutive day of a workweek – and are entitled to time-and-a-half pay for the first eight hours on the seventh consecutive day of a workweek.
Your Tips Belong to You
In California, the law is very clear regarding the ownership of tips: they are exclusively the property of the employee who receives them, whether handed directly or left indirectly for them. This is underscored by strict prohibitions against employers taking any portion of tips. This applies regardless of the manner in which the tips are given; they are considered the personal property of the recipient and are not classified as wages by the state. This distinction is crucial because, unlike wages, tips do not influence the calculations of minimum wage or overtime payments.
Further emphasizing the protection of employees, California law mandates that tips left for servers cannot be used to offset the employer's obligation to pay the state minimum wage. For instance, even if an employee earns $10 per hour in tips, this additional income does not impact their right to receive the full minimum wage. This regulation ensures that tips are a bonus on top of the legally guaranteed wage, rather than a substitute for it.
Moreover, in California, employers are prohibited from deducting any service charges or processing fees from tips that customers leave via credit card. This ensures that employees receive the full amount of gratuity intended for them without any deductions that could otherwise diminish their earnings.
Tips are given at the discretion of the customer and are technically classified as gratuities, not wages. This classification means that while they are subject to regular income taxes by the Internal Revenue Service, they do not affect the calculation of overtime pay under state law. Employees should be aware that all received tips, regardless of form, must be reported as taxable income to the IRS. This aspect of tip regulation highlights the dual nature of tips as both a benefit and a responsibility for employees.
Overall, the robust protections afforded to tipped employees in California underscore the state's commitment to ensuring that workers in service positions are fairly compensated for their labor without undue interference from employers.
Tip Pooling
California does allow what is known as tip pooling, which means employers can require servers to share their tips with other employees under certain circumstances. Tip pooling amounts to pooling all or some of the tips received by servers and distributing them fairly and responsibly according to a predetermined formula that is in accordance with state laws, including:
- The tip pool consists of employees only
- The tip pool is funded with tips given to these employees
- The tip pool excludes the employer and any agents of the employer from receiving tips
An agent of the employer in this context is anyone who has the authority to hire or fire the employees in the tip pool or who supervises, directs, or controls what the employees in the tip pool do on the job. A manager is allowed to benefit from the tip pool if they share in the same tasks that the non-agent employees do. All employees who are in what is considered the chain of service are eligible to participate in the tip pool. While servers, hosts, bartenders, and bussers are typically considered links in the chain of service to customers, cooks, cashiers, and dishwashers are not.
Tip Violations
When an employer in California engages in the illegal practice of withholding tips, it constitutes wage theft but is treated under the law as conversion rather than a straightforward unpaid wage issue. This distinction arises because tips, legally recognized as the sole property of the employee, are not classified as wages. Therefore, when an employer withholds tips, they are essentially taking possession of property that does not belong to them.
Navigating such legal waters can indeed be complex and intricate, requiring a nuanced understanding of both employment and property laws. As such, pursuing a claim for conversion involves establishing that the tips were clearly intended for the employee and were unlawfully withheld by the employer. This legal route underscores the importance of retaining a seasoned attorney specializing in California unpaid wages and employment laws. A skilled lawyer will help articulate the nuances of your case effectively, manage the legal complexities, and advocate vigorously for the rightful recovery of your property.
Furthermore, it is crucial for employees to document their tips accurately and maintain clear records of any discrepancies between what was earned and what was received. This documentation will serve as critical evidence in a legal claim. In addition to seeking legal counsel, employees may also consider consulting with local labor boards or consumer protection agencies that offer guidance and support in cases of wage theft and employer misconduct.
Ultimately, having professional legal guidance not only helps in navigating the legal system more effectively but also increases the likelihood of securing a favorable outcome in reclaiming unlawfully withheld tips. This professional support is vital in holding employers accountable and ensuring that employees receive the full compensation they are legally entitled to.
What Is the Wage Theft Prevention Act?
California’s Wage Theft Prevention Act of 2011 (WTPA) has been in effect since January 1, 2012, and it requires all employers to provide every nonexempt employee with specific information regarding their pay and benefits in the form of a written notice. All the following requirements apply:
- The notice must be written in the same language that the employer normally employs when sharing employment-related information with employees.
- The notice must be provided to employees at the time an employee is hired and within seven days of any changes in terms of pay or benefits occurring.
- The notice must outline the employee’s pay rate, work schedule, regular payday, overtime compensation, and more.
The purpose of the notice is to help ensure that employees are fully aware of the wage rates and specifics that apply to them at the job in question.
FAQ
The answers to some of the questions that employees ask most frequently in relation to WTPA may help you with some of your own.
What is the goal of the WTPA?
To whom does the WTPA apply?
All employers in the private sector must adhere to the WTPA unless a specific exception applies.
What requirements are included?
Employers are required to provide every employee with specific work-related information in writing, including:
- Their rate of pay and whether they are paid by the hour, shift, day, week, piece, salary, commission, or otherwise
- Any work allowances
- The regular payday as designated by the employer and as required by state law
- The employer’s name, including any doing business as designation
- The physical address and mailing address of the employer’s main office or primary place of business
- The employer’s telephone number
- The contact information for the employer’s workers’ compensation insurance provider
Can an employee waive the notice requirement?
No, state law requires all employers to follow all WTPA requirements, and none of them are subject to waiver.
What if the only change is a pay increase?
What about employees who are covered by a union contract?
What is a wage theft notice?
