Having employees used to be a simple matter of hiring them and paying an agreed upon amount for the work. When employment taxes were enacted, things got a bit more complicated but if the business manager didn’t handle things, there was only one person in charge. Those days are long gone. Today, whole departments are assigned to do nothing but keep track of human resource matters. The Human Resource Department takes care of hiring, taxes, payroll and making sure that the company is in compliance with the laws set forth by both federal and state government. It can certainly become confusing and overwhelming at times.
Hazards Of Non-Compliance
When a Human Resource department makes an error, it can cost the company thousands of dollars in fines. It can also cause a loss of reputation for the company. Both large and small companies are subject to these laws and it is up to both the company owner and the associated human resource staff to make sure they are up-to-date on every regulation set forth. For smaller businesses especially, an error can be so devastating that the business is forced to shut down. Let’s take a look at some of the most common human resource laws in California and the associated penalties a business is facing for non-compliance.
Itemized Check Stub
Every employee in California is required to be given a stub with their paycheck that contains ten (10) itemized things, as they pertain to the position of the employee. These things are: Gross wages earned, total hours worked for non-salary employees, a list of deductions, net wages, dates of the pay period, name of employee and last four numbers of social security number, name and address of employer, applicable hourly rates, amount of accrued sick leave, and number of any piece-rate work and rate of pay.
Violation of this law can see the employer paying a fine of up to $4,000 and court costs. This may not seem extensive at first, but one case of this can lead to a case being brought against the company for each of its current and past employees.
Failure To Pay Overtime
One place employers find themselves in hot water is failing to pay required overtime to an employee. The overtime laws can be a bit confusing and it is important to understand exactly who is eligible for the overtime pay and in what circumstances they are owed overtime.
California law states a person is to be paid time and a half for:
- Every hour over eight (8) worked in one day
- Every hour over forty (40) worked in one week
- The first eight (8) hours of the seventh day worked in any one-week
California also requires that an employee be paid double time for:
- Any hours worked over twelve (12) in one day
- Every hour worked over eight (8) on the consecutive seventh day in a week
An employer who does not pay the required overtime can be facing a great deal more than simply making up the back pay. First, the employee will be eligible for not only the back pay but also up to thirty (30) days worth of pay. An employer is required to pay all the owed overtime on the day an employee is let go, or within 72 hours if the employee quits. If the employer does not provide this pay, the employee is eligible for one day’s full pay for every day he has to wait, up to thirty (30) days.
Next, the employee can bring charges stating a violation of the check stub requirement. This will result in fifty (50) dollars for one pay period and one hundred (100) dollars for each additional pay period. Remember that the check stub violation includes not only the employee in question but also each employee still working and those working in the past. This amount can break an employer quickly. Court costs and attorney fees are then added onto the cost.
I-9 Compliance (Immigration)
All California employers are responsible for making sure every employee is eligible to work in the United States. It is the employer’s responsibility to complete an I-9 form and thoroughly analyze all papers and identification provided by the employee. While an employer is not responsible for filling out an I-9 on contracted workers, it could become a legal issue if there is a question on whether or not the workers were actually contracted. In order to cover themselves where contracted workers are concerned, employers can:
- Prominently display a sign in the workplace that forbids the use of undocumented workers
- Require all subcontractors to sign a form agreeing not to use undocumented workers
- Verify the work eligibility of all contractors and subcontractors
- Perform regular audits to make sure there is no indication of a problem
Compliance requires an employer to complete an I-9 form within three (3) days of hiring an employee. This form needs to have Section 1 filled out by the employee, Section 2 filled out by the employer and listing what acceptable forms of identification were used to prove the individual’s eligibility to work. The I-9 form must be kept for at least three years from the date of hiring an employee or at least one year after the employee leaves.
Employers who do not have the I-9 filled out completely or who do not keep the forms on file the appropriate amount of time may face both civil and criminal charges. The penalties include:
- Up to $1,100 for each I-9 violation (This includes incomplete forms, failure to show forms to auditors, and failure to keep forms the proper length of time.)
- Fines amounting up to $6,500 if the employer knowingly falsified the I-9 forms
- Fines up to $16,000 for either knowingly hiring undocumented workers or refusing to accept the types of identification listed as appropriate on the I-9 form.
- A prison sentence up to ten (10) years
Breaks And Meals
Meal and rest breaks are also requirements that can result in fines if they are not properly carried out. There is also a necessity to keep a record of these periods in case there is some discrepancy with an employee.
An employer must provide each employee with a thirty-minute lunch break for every five (5) hours worked. If the employee works for ten (10) hours, a second thirty-minute break must be scheduled. The meal period can be unpaid as long as the employee is relieved from all tasks and is allowed to leave his workstation for thirty (30) minutes. It is required that employers keep a record of these meal breaks.
In addition to the meal period, every employee is entitled to a full ten-minute break for every four (4) hour period they are scheduled to work. The time may not include the time needed to get to the break area and back. Bathroom breaks are also not counted as one of these rest periods. While there is no requirement as to when the breaks are to be scheduled, it is deemed reasonable to expect them halfway through the time scheduled. No written record is needed but if there is a question as to whether or not the employee received a rest period, it will be up to the employer to prove it did occur.
If an employee is not given the required meal period or breaks, the employer must compensate him at the rate of one hour for each period missed. This is in addition to the employee’s regular pay for working during that period. An employer who does not keep records of the mandatory meal breaks is subject to a five hundred (500) dollar fine.
One of the most likely places an employer can get into trouble is with the failure to keep required paperwork. It is essential that your Human Resource department is kept current on all the labor laws required by the state of California as well as those set forth by the federal authorities. With a lack of appropriate paperwork, you not only face fines for not complying with paperwork laws but also bear the burden of proof if an employee brings charges stating non-compliance with the labor laws.
One thing you can do to make sure your human resource department is keeping all the correct records is to download a copy of the California Labor Laws and have them read it. You can also make sure you remain up-to-date on all the new laws that come up. Another option would be to outsource your human resource work to a business that specializes in this type of work leaving you with peace of mind knowing that everything is being handled exactly the way it should be.
Running a business is no longer a matter of hiring an employee or two and paying them a wage. It is essential that you follow the correct procedures, avoid asking the incorrect questions and providing each and every employee with the required breaks, pay stubs and leaves that they are entitled to according to the law. If you are just starting out in business, don’t make the mistake of thinking that having only one or two employees exempts you from all the laws. While there are a few that are dependent upon the number of employees you have, most are required regardless of whether you have one employee or a thousand employees. If you are well established in your business, it might be a good time to review the California Work Laws and make sure you are complying with all of them.