An Overview On Responding To Employee Wage Complaints For Business Owners In California

In this article, you can discover…

• What to do if you receive a wage complaint as a California employer. 
• How to properly document employee wage concerns.
• Whether wage complaints can be resolved through mediation. 

If I Receive An Employee Wage Complaint, What Should Be My First Response?

Receiving a wage complaint can be frightening, especially if you’ve never been through the process before or are new to California wage law. If you receive a wage complaint, it would be in your best interest to immediately contact an experienced employment and labor attorney who is experienced in wage and hour law cases like yours. 

How Can I Properly Document My Employee Wage Concerns?

This would depend on both the nature of the concerns and the timeframe in which the concern is raised. For instance, an employee failing to clock out properly is definitely an instance where an employee’s wage issue needs to be documented. If an employee fails to clock in at the beginning of the day, you will need to meet with this employee as soon as possible to find out when they started their shift so that you can document their time and they can sign off on their hours. 

As a rule, wage records will either need to accurately reflect when an employee clocked in on their own or include documents where the employee has signed off to the corrections on their time record. Management should never unilaterally alter an employee’s time record.

Additionally, concerns can arise for a number of complex reasons. For instance, let’s say you have an existing employee who comes to you saying that you failed to pay them overtime, and you find out that you have violated some of California’s unique overtime laws. In this circumstance, you may be faced with the option as the employer of either paying back wages for any missed overtime or ignoring the problem.

Ignoring the situation is not advisable. The statute of limitations on overtime or wage claims is four years, which is a long time to lose sleep at night, wondering whether or not your employees will sue you for wage violations. If you should choose to rectify the situation by compensating your employee, you would be wise to document your backpay calculations in a spreadsheet. This way, you can have your employee agree that your calculations are correct prior to repaying them for any overtime. 

I would also recommend having your employee sign a separate settlement agreement that states that you, as the employer, have corrected the overtime issue and are repaying any lost wages. This agreement may include a little extra compensation, which is referred to as consideration, along with a release of all claims and an agreement not to sue. While there is no guarantee in California law that this agreement will be bulletproof, it will at least benefit you to have a signed agreement.

Attorney Scott Shibayama is a seasoned lawyer based in Placer County, CA who has helped countless clients just like you navigate the intricacies of wage and hour law. With Over 30 years of legal experience, he is prepared to assist you in responding to employee wage complaints so that you can continue to run your business with peace of mind.

Still have questions? Ready to get started? Contact Vision Law today to schedule an initial consultation.

Should I Seek Legal Counsel Over Minor Wage Complaints?

It may not be necessary to seek legal counsel if your wage complaint is truly for a minor amount and you plan on handling it directly with your employee. If you feel confident in your knowledge of California’s wage and hour laws, you are more than welcome to resolve the issue on your own. However, it would be wise to seek the advice of a knowledgeable wage and hour lawyer if there is an opposing attorney involved, no matter the size of your case.

What Can I Do To Resolve Wage Complaints Through Mediation?

In my opinion, mediation is not necessary if we are dealing with an opposing attorney who is experienced and reasonable. Mediation is expensive, currently costing as much as $15,000 a day, so it can be far more cost-effective for both attorneys to simply have informal discussions to settle the case on their own. 

Mediation can be appropriate in wage and hour cases, but my firm does not typically engage in mediation unless we have attempted settlement with the opposing counsel or the opposing counsel is being exceptionally unreasonable.

Moreover, my firm likes to engage in discovery beforehand. “Discovery” is the litigation process that allows the parties to exchange information, documents, and witnesses. In certain wage and hour cases, such as class action or PAGA cases, this discovery will occur informally. This means that formal requests for documents and other elements found in the litigation process may not be necessary. Without basic discovery the parties cannot properly evaluate the merits and exposure, making mediation ineffective.

Generally, employers will agree to provide the opposing party with the information that they need to properly evaluate the full scope of the case. This information includes written wage and hour policies as well as daily time records and pay stubs. It is not always necessary, but we may need to hire an expert third-party mediator to help us agree to a reasonable settlement figure.

What Steps Can I Take To Prevent Retaliation Claims After I Have Already Addressed Wage Concerns?

This can be a difficult situation, not only because being upset is human nature but because this will generally only apply to your current employees. You are unable to retaliate against ex-employees, but current employees who present wage concerns or wage complaints are what we call protected under the law. This means they, by complaining about a violation of law, have engaged in protected activity and cannot be retaliated against. As an employer, this can be rather difficult if you need to continue managing the employee.

There are times when an employee may make a wage complaint that doubles as a discrimination complaint or a complaint about health and safety. If the employee’s complaint is protected by law, it is possible that your employee could accuse you of taking retaliatory actions against them if you try to reasonably manage or discipline them. 

Again, it can be difficult to prevent retaliation claims, but there is a defense. If you have a legitimate business reason for taking the alleged adverse action against your employee, that can trump the alleged retaliation. Nonetheless, exercising caution in what actions you take against an employee who has made a complaint is prudent. Experienced and knowledgeable employment and labor counsel can help you navigate that tricky terrain. 

How Can Quick Responses And Transparency Prevent A Wage Complaint From Leading To Larger Legal Issues?

If you find you have violated California wage and hour law, transparency with your employees may avoid larger issues in the long run.

For example, let’s say you have misclassified a non-exempt employee as exempt. Let’s say this employee worked an average of five overtime hours for the past year. Even though you misclassified the non-exempt employee and failed to pay the appropriate overtime under state and federal law, you have the opportunity to rectify the situation once the error is identified.

The employee was paid a salary but did not record their time. To fix the problem, you first must calculate what is owed to them. You should consult with the employee to get an estimate of all of the overtime hours worked. Once we have the estimate we should have the employee sign off that they agree the estimate reasonably reflects the overtime hours worked and that overtime back pay will be based on the estimated overtime hours and no more.

Once we have the overtime hours we must determine the “regular rate” of pay at which to pay the back overtime. That calculation is the annual salary divided by 2080 hours. 2080 hours is 52 weeks at 40 hours per week because California law considered the salary to cover 40 hour workweeks.

Multiply the “regular rate” times 1.5 (overtime rate) x the overtime hours = the overtime back pay owed.

And of course going forward, all of the employee’s time will need to be tracked and accounted for. You should also convert the employee from salary to hourly pay. That makes the overtime calculation very simple as the hourly rate is the “regular rate” for overtime purposes.

Fixing the problem can be a bitter pill to swallow, but doing so can help you earn goodwill and avoid future litigation.

Are Ready To Get Started?

For more information on Responding To Employee Wage Complaints, a free initial consultation with Attorney Scott Shibayama may be your next best step. Get the information and legal answers you are seeking by calling (855) 534-1490 today.