We protect good companies from bad outcomes.

It frequently costs an employer over $100,000 to defend itself against a labor claim by one employee. Defending a company against a class and representative lawsuit can be many times more costly than that. Adding to those business costs, many labor laws award attorney’s fees to the employee’s counsel at the end of a case, even if the damages are low. Often the employee’s attorney’s fees are higher than the employee’s actual award.

Kitchin Legal will design and help you implement employment practices that can avoid typical wage and hour lawsuits and discrimination/harassment/retaliation claims.

Wage and Hour Risks

These are a few of the most common risks every employer in California faces.

Misclassifying a person as an independent contractor can place a company in serious jeopardy.

“Any person rendering service for another, other than as an independent contractor, or unless expressly excluded herein, is presumed to be an employee.” (Labor Code § 3357) In the recent Dynamex v. Superior Court (Lee) decision, the California Supreme Court determined that California will use the “ABC Test” to determine whether someone is an independent contractor or employee for claims brought under the California Wage Orders.  A worker will be deemed to be an employee unless the employer can prove that: (A) that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; and (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

Misclassifying a person as exempt from overtime pay is one of the most frequently seen employment claims in California.

Under California law, the employer is required to establish that the employee is not entitled to overtime, not vis-a-versa.  Non-exempt employees have a range of other rights that must be protected as well.  Knowing the difference between exempt and non-exempt employees is crucial to reducing litigation risks.

Failing to pay an employee for all time worked can be costly.

An employer can be ordered to pay two times the value of wages that were unpaid.   In 2018 the California Supreme Court held that even short periods of work time are compensable.

Failing to maintain appropriate timekeeping records for hourly, non-exempt employees, is risky.

California Labor Code § 226 and the California Wage Orders set out strict recordkeeping requirements for work time and meal periods for non-exempt employees.  Penalties for noncompliance with these laws can add up to $4,000 per employee.

Failing to provide non-exempt employees appropriately-timed rest and meal periods is a primary motivator for employment lawsuits.

In Brinker Restaurant Corporation v. Superior Court, the California Supreme Court clarified how and when employee meal periods and rest periods under Labor Code § 226.7 are earned.  The law is not complicated in theory, but can be very difficult in its application.

Failing to pay sales commissions to a sales associate in accordance with California law can result in substantial liability.

Precisely when and how an employee earns sales commissions is established by contract, but the commission rights are governed by principles of both labor law and contract law.  Drafting commission agreements that protect a business from future liability is important.