By Rafael A. Icaza –

Do you own a restaurant, bakery or catering service?  Are you a construction contractor?  Do you have employees who are not immediate family members?  If so, this blog is for you.  In it I give you an overview of California's Wage and Hour laws.  These laws regulate the minimum and overtime wages to be paid to workers, as well as other employment-related matters, such as breaks to eat and rest.  While there are separate state and federal wage and hour laws, here I focus on California's, which are regarded as being tougher, more complex, and more difficult to comply with than their federal counterparts.  The amounts and fines due for violating these laws can quickly add up, particularly when several employees are affected.   These are the main issues I'm addressing:

• Minimum Wage
• Industrial Welfare Commission Wage Orders 5 and 16
• Penalties for Non-Compliance

Minimum Wage

California's minimum wage is not less than $8.00 per hour. There are some limited exemptions from the payment of the minimum wage. Parents, spouses or children of an employer are exempt, as are persons employed in administrative, executive or professional occupations.  The exemptions are outside the scope of this blog, which is confined to the wage and hour requirements for non-exempt employees in restaurants, bakeries and caterers, and construction contracting and similar industries.

Industrial Welfare Commission Wage Orders

The regulations for those industries—and all others in the State—are found in Industrial Welfare Commission Orders, of which there are 17.  Of these, Order No. 5 regulates the “wages, hours and working conditions in the Public Housekeeping Industry” – including restaurants and similar establishments where food is prepared and served such as bakeries or catering businesses.  Order No. 16 regulates “Certain On-Site Occupations in the Construction, Drilling, Logging and Mining Industries” — such as construction, remodeling and repair work businesses.

Wage and Hour Orders are not particularly easy to understand or comply with.  Order No. 5, for example, is ten pages long, printed in small nine-point font characters.  Order No. 16 is eight pages long, also in nine point font. Some Orders are printed in larger 11-point font, but in Chinese. The Orders bear this legend on their covers: “This order must be posted where employees can read it easily”.

Perhaps in response to the confusion that may arise regarding the applicability of particular orders to particular jobs, the Industrial Welfare Commission created anIndex of Businesses and Occupations.  The Index sets forth a list of 623 businesses and/or occupations, with their corresponding Order.  (Some businesses and occupations are listed under more than one entry.)  Examples of the occupations include Chicken Debeaking (Order No. 14, Agricultural Occupations) and Freezing and Canning Rabbits (Order No. 3, Canning, Freezing, and Preserving Industry).

The Orders under discussion here, Nos. 5 and 16, share similarities.  In both, the workday and workweek are eight hours and 40 hours long, respectively, and the overtime rate for hours worked over eight per day or over 40 per week is 1 ½ times the employee's regular rate of pay.  Likewise, the overtime rate for hours worked over 12 in any workday and for all hours in excess of eight on the seventh consecutive day of work is double the employee's rate of pay. There are also identical provisions to calculate the overtime rate for nonexempt full-time salaried employees.  The Orders also impose records-retention requirements—to track such things as of the wages, hours and working conditions of each employee.

Under certain circumstances employers can credit amounts, such as meal amounts, which they have provided to their employees pursuant to a voluntary, written agreement.  But even then the amounts that can be credited are capped.  Thus, employers can credit employees no more than $2.90, $3.97 and $5.34 for breakfast, lunch and dinner, respectively. Where employers require uniforms to be worn or the use of tools, employers shall provide and maintain them.

Employers Must Provide Employees Meal and Rest Periods

Meal periods: No employer shall employ any person for more than five hours without providing them a meal period of not less than 30 minutes. Unless the employee is relieved of all duties during the 30 minute meal, the meal period is compensated as time worked. Employers that fail to provide the meal periods shall pay the affected employees at the rate of one hour (i.e., not at the rate of half an hour) of pay at their regular rate for each workday that the meal period is not provided. (Order No. 16 provides for a second meal period where the employee works more than 10 hours per day.)  Rest periods: Employers must also provide their employees with paid rest periods, at the rate of 10 minutes per four hours or major fraction thereof.  Employers who fail to provide their employees with the 10 minute rest periods shall pay them at the rate of one hour of pay (i.e., not at 10 minute increments) at their regular rate for each workday that the rest period is not provided.

Employers are Responsible for Seeing to it that their Employees take their Breaks; Penalties 

Real or feigned ignorance about your employees' conduct won't protect you from incurring penalties:  When employers know, or should know, that employees are not taking their breaks, they must pay them just the same as if they had denied them the opportunity to take them.  In other words, employers are on the hook to their employees for those payments even when the employee foregoes the breaks at his or her own initiative. 

In addition to the payment in one-hour increments for missed meal and rest periods, there are other penalties for non-compliance with the Orders. Thus, on top of any other civil penalties provided by law, in the case of initial violations employers are penalized $50.00 for each underpaid employee for each pay period where the employee was underpaid, in addition to the amount which is sufficient to recover unpaid wages. For subsequent violations, employers are penalized $100.00 for each underpaid employee for each pay period where the employee was underpaid, in addition to an amount which is sufficient to recover the unpaid wages. The affected employee shall receive payment of the wages recovered. Importantly, in the case of Order No. 16 criminal penalties are also available for violations.