Compliance Watch:
Penalties for Breaking California Labor Laws

July 20th 2024

With a comprehensive framework of labor laws in place, California has established a strong foundation to safeguard the well-being of its workforce. These laws encompass a wide range of areas, including wage and hour regulations, workplace safety standards, and more. Violators can face a host of penalties for breaking California labor laws ranging from civil penalties to suspensions or fines.

In this article, we will delve into these consequences while sharing practical tips to help you avoid potential violations. By familiarizing yourself with California’s labor laws and the associated penalties, you can navigate the complexities of the employment landscape while cultivating an atmosphere of trust, fairness, and compliance.

This Article Covers

Most Common Labor Law Violations in California
Penalties for Breaking California Labor Laws
How You Can Avoid Violating California Labor Laws

Most Common Labor Law Violations in California

Every year, the US records a myriad of labor law violations. From failure to pay minimum wage to misclassifying workers, these violations undermine worker rights and protections.

California has its fair share of labor law violations too. Here’s a look at some of the most common ones that the state is dealing with:

  • Employee Misclassification: Misclassification occurs when an employer wrongly classifies an employee as an independent contractor, denying them the benefits and protections entitled to employees. This is a common problem in California, costing the state more than $7 billion annually, according to the California Department of Labor Standards Enforcement.
  • Wage Theft: This violation can take several forms, including paying less than the minimum wage, failing to provide overtime pay, or illegally deducting wages. According to data from the Economic Policy Institute, an estimated $1,979,000,000 in annual wages weren’t paid to California workers from 2013-2015.
  • Unsafe working conditions: Californian employers are required by law to provide their employees with a safe and healthy work environment. But even with these legal safeguards, the state still sees fatal work injury cases due to unsafe working conditions. In 2021, California had 462 fatal work injuries, according to the US Bureau of Labor Statistics.
  • Workplace Discrimination: Despite being known as a majorly progressive state, California still sees many discrimination incidents. Based on the records of the US Equal Employment Opportunity Commission, in 2021, a total of 3,865 discrimination charges were filed by California-based workers and applicants.

A wooden gavel and block surrounded by dollar bills. Photo by Sasun Bughdaryan on Unsplash

Penalties for Breaking California Labor Laws

As an employer in The Golden State, here are the key labor laws you need to know along with the penalties for breaking California labor laws:

California Minimum Wage Laws

Specific laws determine the minimum wage California employers must pay their workers. These laws are separate from the Federal Minimum Wage.

As per Minimum Wage Order, all employees in California must be paid at least $16.00 per hour. Download the U.S. Minimum Wage 2024 Poster now.

There are, however, certain employees who are not required to receive the minimum wage as mandated by the law. This includes outside salespersons, individuals who are the employer’s parent, spouse, or child, and apprentices who are officially enrolled under the State Division of Apprenticeship Standards.

It’s also important to note that different California communities can establish their own minimum wage, but it cannot be lower than the state’s minimum wage. In situations where federal, state, and local minimum wage laws overlap, employers must follow the strictest standard that provides the greatest benefits to their employees. This means that the highest available rates determine employee pay.

Learn about the minimum wage rates per city/county in our comprehensive California Labor Laws Guide. 

Penalty for Violation

When employers violate wage laws, they must pay the unpaid wages to their employees. Additionally, some labor code violations carry penalties that employers must pay on top of unpaid wages. For instance, if the state’s minimum wage is not met in each pay period, there is a $250 penalty. State agencies determine these penalties.

California Overtime Laws

In California, the state’s wage and hour laws are stronger than federal laws, so they usually take precedence. 

Under the federal law Fair Labor Standards Act (FLSA), overtime must be paid at a fixed rate of 1.5 times the hourly rate for working over 40 hours weekly. 

But in California, nonexempt employees (Download U.S. FLSA Exemption Salary Threshold 2024 Poster now) are entitled to overtime pay when they work for more than 8 hours a day, 40 hours a week, or six days a week. The employer must pay overtime at either 1.5 times or double the regular pay rate.

For hours beyond eight but up to 12 in a day or the first 8 hours on the seventh consecutive day, it’s 1.5 times the regular rate. Beyond 12 hours in a day or beyond 8 hours on the seventh consecutive day, it’s double the regular rate.

There are, however, exceptions to the overtime rule, which include:

  • Employees working on an alternative workweek schedule
  • Health industry employees on an alternative workweek schedule
  • Hospital and care center employees with on-site patients
  • Camp counselors
  • Personal attendants of nonprofit organizations
  • Resident managers in retirement homes with under eight beds
  • Employees providing 24-hour residential care for minors

FLSA overtime rules don’t cover agricultural workers involved in crop transportation or processing within the same state. However, in California, agricultural employees who prepare soil or harvest crops receive overtime pay after 10 hours of work in a day and for the first eight hours on the seventh consecutive day of work. They also receive double time for all hours beyond eight on the seventh day of work in a week.

Learn more in detail about California Overtime Laws.

Penalty for Violation

Employers who violate wage and hour laws face penalties under Labor Code 558. The penalty is $50 for the first violation, and for subsequent violations, it increases to $100. These penalties are separate from any owed back wages that the employers must also pay to their affected employees.

California Fair Employment and Housing Act (FEHA)

The Fair Employment and Housing Act (FEHA) covers both public and private employers, labor organizations, and employment agencies. According to FEHA, it’s against the law for employers to discriminate against job applicants or employees based on certain protected categories, including:

  • Religion, race, and ethnicity
  • Physical or mental disability
  • Medical problems
  • Information on the human genome
  • Relationship status
  • Pregnancy (including childbirth and related medical issues)
  • Age
  • Sex (including breastfeeding and related conditions)
  • Sexual orientation
  • Gender identity/expression
  • Military service status

Under the FEHA, it is also prohibited to retaliate against them for standing up for their rights. This applies to all workplaces, even those with fewer than five employees because everyone deserves to work in a harassment-free environment, regardless of the company’s size.

Penalty for Violation

Employers who engage in unlawful discrimination can face serious consequences. These consequences can include:

  • Pay the employee back pay, contribute to their retirement funds, or provide other compensation to make up for the harm caused by the employer’s unlawful actions.
  • Pay damages equal to the amount of money the employee may have lost due to unfair termination, being denied a promotion, or receiving unequal pay.
  • Cover the employee’s attorney fees and expenses related to the legal process, including expert witness fees.
  • Reinstate the employee in their job or provide compensation for their future earnings if reinstatement is not possible.
  • Provide compensation for the emotional pain and suffering experienced by the employee.

California Occupational Safety and Health Act (Cal/OSHA)

Cal/OSHA is responsible for setting health and safety standards in the state to ensure that workers are protected from on-the-job injuries and illnesses. It has adopted Federal OSHA standards but has also set its own unique standards surrounding Toxic Chemical Handling and Exposure, Agriculture, Repetitive Motion Injuries, Heat Exposure, and so on.

Under Cal/OSHA, employers are required to:

  • Provide a safe and healthy work environment for their employees.
  • Take action to fix any hazardous conditions that could cause serious harm to employees.
  • Adhere to all applicable Cal/OSHA standards, including providing necessary training. For instance, employees should receive understandable information and training about any chemicals used or stored at the workplace.
  • Report any serious injuries, fatalities, or work-related illnesses to the nearest Cal/OSHA office within 8 hours. Any hospitalizations involving three or more employees due to a work-related incident must be promptly reported.
  • Display Cal/OSHA’s Safety and Health Protection on the Job poster in a visible location to ensure workers know their fundamental rights and responsibilities.

Compliance officers often conduct inspections of workplaces to identify and address hazardous conditions. These inspections can be triggered by regular scheduling, reports of imminent danger, workplace fatalities, worker complaints, or referrals. If violations are found, they issue citations and orders.

Penalty for Violation

Cal/OSHA violations can be categorized as serious, willful, repeat, failure to abate, or other-than-serious. The penalties imposed depend on the violation category and the offense’s severity and extent.

A “serious” violation can result in penalties of up to $25,000. The employer’s size, good faith efforts, and past compliance history can also influence the penalties imposed.

California Family Rights Act (CFRA)

The California Family Rights Act (CFRA) applies to employers with five or more employees. It mandates that eligible employees can take up to 12 weeks of job-protected leave within 12 months for various reasons. These reasons include the employee’s own serious health condition, a serious health condition of a family member, or the need to care for a child through birth, adoption, or foster care.

Although the CFRA and the federal Family and Medical Leave Act (FMLA) share many similarities, they have differences, such as the definition of covered family members and what qualifies as a serious health condition.

Penalty for Violation

If an employer unlawfully interferes with an employee’s rights under CFRA or FMLA, they may be subject to a civil lawsuit or administrative proceeding. As determined by the court or state agency, employers may need to cover the cost of the following:

  • Employee losses, including back pay and future wages, if reinstatement is not possible
  • Compensation for the emotional distress experienced by the employee
  • Employee’s attorneys’ fees
  • Costs associated with the legal process

Wage Theft Prevention Act of 2011

To help address wage theft issues in the state, California made the move to pass the Wage Theft Protection Act of 2011, which went into effect on January 1, 2012.

Under the act, employers must give newly hired employees a written notice containing essential details about their pay and other benefits; this includes:

  • The type of pay (hourly, salary, commission, etc.) and the corresponding rate or rates
  • Any allowances considered part of the minimum wage, like meal or lodging allowances
  • The regular payday, as required by law
  • The employer’s name, including any other names they use for business
  • The physical address of the employer’s main office or primary place of business and a separate mailing address, if applicable

To help employers meet this requirement, the Labor Commissioner will provide a template that fulfills the notice requirements.

It’s important to note that this law only applies to private employees unless a specified exception exists.

Penalty for Violation

If an employer violates the Wage Theft Prevention Act, they could face civil penalties that add up pretty quickly. For the first offense, they might have to pay a hundred dollars per affected employee for each pay period. But if they keep on breaking the rules, that penalty doubles to two hundred dollars per employee per pay period.

Independent Contractor ABC Test

Several states, including California, have implemented the ABC test to address employer misclassification. This bill was signed by the state governor into law in 2019 and took effect on January 1, 2020.

The ABC test helps determine if a worker should be classified as an independent contractor or employee. It sets three conditions that must be met so that a worker can be considered an employee:

  • The worker has the freedom to do the job without being controlled or directed by the hiring company, both in the contract and in reality.
  • The worker performs tasks that are different from the usual operations of the hiring company.
  • The worker is regularly involved in an independent trade, occupation, or business similar to their work.

So basically, if the hiring company can’t meet all these conditions, the worker will be classified as an employee.

Penalty for Violation

According to California Labor Code 226.8 LC, employers who intentionally misclassify their employees can face penalties ranging from $5,000 to $15,000 per violation and any additional penalties permitted by the law.

California Whistleblower Protection Act

If an employee believes their employer is breaking a state or federal law, the California Whistleblower Protection Act encourages them to report it to the appropriate authorities. This can include law enforcement agencies, supervisors, or other authorized employees who can investigate and address the issue. The act makes it illegal for state officials and employers to retaliate against employees who file complaints.

Penalty for Violation

California Labor Code § 1102.5 LC stops employers from punishing employees who report their illegal activities to the government or police. Employers can be fined up to $10,000 for each instance of retaliation.

California Child Labor Laws

Most minors are protected by California’s child labor laws. In the California Labor Code, a “minor” refers to anyone under 18 years old who is required to attend school according to the Education Code, as well as anyone under six years old.

If minors want to work, they must obtain an Employment Certificate, also known as a Work Permit. These certificates are issued by either the California Department of Labor or the minor’s school, with exceptions for minors in the entertainment industry who can only get them through the state Labor Department.

There are specific rules regarding work hours and night shifts for minors based on their age. For example, minors under 16 years old who are not in school can work up to 8 hours a day, 48 hours a week, or six days a week. However, during school hours, they are only allowed to work 3 hours each school day or 18 hours per week.

California also follows federal regulations to protect minors from hazardous work environments. This means employers are prohibited from hiring minors for certain hazardous occupations, such as handling explosives, operating a motor vehicle, mining, quarrying, logging, or operating power-driven machinery like saws or shears.

For a full list of prohibited occupations for minors in California, you can look at this official guide to California Child Labor Laws.

Penalty for Violation

A violation of California Child Labor laws is considered a misdemeanor which can be penalized with fines, imprisonment, or both. For third and subsequent violations and Class A violations, fines can range from $5,000 – $10,000.

How You Can Avoid Violating California Labor Laws

Complying with California labor laws is crucial for employers to create a fair and legal work environment. To help you avoid the penalties for breaking California labor laws, here are some proactive steps you can take:

Tip #1 Educate yourself with key labor laws.

This might seem like an obvious tip, but several employers fail to understand the importance of educating themselves about the state’s labor laws. Don’t be one of them. Familiarize yourself with the California Labor Code and related regulations through guides like this. The California Division of Labor Standards Enforcement (DLSE) also offers a wealth of information on labor laws, including guides, FAQs, and publications.

Tip #2 Classify employees correctly.

Determine whether your workers should be classified as employees or contractors. Understand the criteria used by California labor laws to make accurate classifications. If you misclassify your employees intentionally to avoid paying minimum wage and giving certain benefits, you may also be liable for wage theft.

Tip #3 Pay your workers fair wages.

Ensure you pay your employees at least the minimum pay rate required by California law. You need to be aware of any changes to minimum wage rates and adjust accordingly. You will also need to comply with California’s overtime laws, which generally require employers to pay eligible employees 1.5 times their regular rate of pay for hours worked beyond 8 hours in a workday or 40 hours in a workweek.

Tip #4 Maintain accurate records using time tracking software.

To pay your employees fair wages, you will also need to keep thorough records of employee information, including hours worked, wages paid, and any deductions made. The best way to do this is through using time tracking software.

These tools automate the process of tracking and recording employee work hours, eliminating manual errors and ensuring accuracy. They can also generate reports for you which can be greatly valuable for audits and resolving disputes.

Tip #5 Handle complaints and disputes appropriately.

Establish clear procedures for addressing employee complaints and resolving disputes. The earlier you can de-escalate an employee problem, the better. You should also avoid retaliating against employees who exercise their rights under California labor laws.

Tip #6 Seek legal counsel if needed.

If you have any doubts or concerns about complying with California labor laws, consider consulting with an employment law attorney who can provide guidance and ensure your practices are in line with the regulations.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.