By Rafael A. Icaza –

On November 22, 2013, Tesla Motors Inc. was sued by two workers (seeking class action status) for alleged violations of California's wage-and-hour laws.  More specifically, Tesla was sued for the practice of rounding up its workers' start times and rounding down their end times in a manner shortchanging its workers' wages.  The lawsuit also claims that Tesla did not provide mandated rest and meal breaks.

The Industrial Welfare Commission of California's Department of Industrial Relations issues Orders regulating the wages, hours and working conditions in various industries. Wage Order No. 1 (Manufacturing Industry), applies to automobile manufacturing.  It provides that workers must receive one-and-a-half times their hourly wage after working eight hours in a day or 40 in a week, and twice their wage after working 12 hours in a day.  While the Order does not address how the time worked is calculated, California's wage and hour laws are interpreted to maximize the wages due employees.  (For example, employers must pay their employees for the time it takes them to put on—and then off—their uniforms.)

When employers look to reduce their labor costs, it is tempting to adopt practices that, as Tesla is alleged to have done, reduce their workers' wages by, if only by a little bit, violating California's wage and hour laws.  Employers so tempted must factor into their calculations the legal costs of defending such practices, as well as the wages, fines and penalties they might ultimately owe.  If you would like more information about wage-and-hour law as it affects your business, feel free to contact me for a free initial consultation.