Guarding Your Paycheck: A Guide to Recognizing Wage Theft

Have you been the victim of wage theft because your employer failed to properly compensate you for your hours worked, denied you overtime pay, or violated minimum wage laws?  Learn about your resources and how the Ruggles Law Firm can assist. This guide aims to empower you with the knowledge and tools to identify instances of wage theft in your workplace. By becoming familiar with the red flags and common tactics employed by unscrupulous employers, you can take proactive steps to protect your hard-earned income and seek the justice you deserve.

Section 1 of 5:  Failure to Correctly Pay California Minimum Wage

The California Minimum Wage Law establishes the minimum hourly wage that employers must pay their employees for regular work hours within the state of California.  While the law does set a baseline for hourly compensation, it encompasses many other provisions and various nuances that employers must adhere to, making it a complex legal framework.

California Minimum Wage Mandate #1 Employers Must Pay Minimum Hourly Wage or more:

• Employers must pay no less than the current California minimum wage of $16.00 per hour.

See California Labor Code §§ 510 and 1194

RED FLAGS that an employer is committing WAGE THEFT by failing to pay the CA Minimum Wage:

1. No Wage Statement: Employers fail to provide any wage statement with the employee’s paycheck.
2. Wage Statement Lacks Hourly Rate: Employee wage statements are devoid of the essential hourly rate of pay information.
3. Paid Under the Table: Employees receive compensation “under the table,” without official records or documentation.
4. Timecard Absence: Employers do not require employees to maintain a timecard or timesheet to track hours worked.
5. Ignored Overtime: Employees are not given overtime pay for exceeding the standard 8-hour workday or 40-hour workweek.

California Minimum Wage Mandate #2 Employers Must Pay Minimum Local Ordinance Wage or more:

• Employers must pay no less than the LOCAL ORDINANCE minimum wage when it is higher than the statewide minimum of $16.00 per hour.

RED FLAGS that an employer is committing WAGE THEFT:

1. No Wage Statement: Employer fails to provide a wage statement with the employee’s paycheck.
2. Wage Statement Lacks Hourly Rate: Employee wage statements are devoid of the essential hourly rate of pay information.

California Minimum Wage Mandate #3 Employers Must Pay Split Shift Premium Hours (when applicable):

• Employers must pay split shift premium hours when an employee works a split shift.

• In California, a split shift is a workday that is interrupted by unpaid time off work that is not a meal break. You have a split shift if you work in the morning, are given several hours off, then work again in the evening. You may be entitled to a shift split premium of 1 hour at the minimum wage.

See Section 4 of Industrial Welfare Commission Wage Order Nos. 1-15

How is the split shift premium calculated?

• Example: Habib makes the state minimum wage of $16.00 per hour working at a restaurant as a dishwasher. His employer assigns him a split shift schedule consisting of two separate 4-hour shift portions within the same workday: The first shift portion from 10am to 2pm, and a second shift portion on the same workday from 6pm to 10pm. He is entitled to his normal hourly wage of $128 (8 hours at $16.00 per hour), plus an additional one hour of wage ($16.00) due to the assignment of the split shift. This brings Habib’s total daily minimum pay to $144.00 ($128.00 plus $16.00).
  Note: If he worked in a city or county with a higher minimum wage, like San Francisco, the premium hour is required to equal the higher minimum hourly wage.
• California labor law only mandates that employers pay a split shift employee the minimum wage plus the premium. If the employee’s regular rate of pay is MORE than the minimum wage, the mandatory premium will be smaller because the employee will have earned more than legally required. An employee’s hourly wage in excess of the minimum wage is credited towards the premium. In many cases, this differential will swallow the entire premium.

RED FLAGS that an employer is committing WAGE THEFT by failing to pay Split Shift Premium Pay:

1. Lack of Notification: Employers do not inform employees about their entitlement to split shift premium pay when scheduling split shifts.
2. Inaccurate Calculations: Employers miscalculate the split shift premium pay owed to employees, resulting in underpayment.
3. No Record of Premium Pay: Employers do not provide a clear record on employees’ wage statements indicating the split shift premium pay.
4. Non-Compliant Wage Statements: Employee wage statements do not include a separate category for split shift premium pay as required by law.
5. False Exemptions: Employers wrongly label employees as exempt from split shift premium pay based on job titles or roles.
6. No Variation in Rates: Employers do not adjust split shift premium pay rates when minimum wage increases occur over time.

California Minimum Wage Mandate #4 Employers Must Pay the Employee a Premium Hour for Missed Meal Periods and Rest Breaks:

• Employers must pay a premium hour at ONE hour of regular rate of pay for all missed meal periods and missed rest breaks.  This premium hour must be included in the employee’s paycheck for the current pay period.

See Labor Code §§ 226.7 AND 512

RED FLAGS than an employer is committing WAGE THEFT by failing to pay for Missed Meal Periods and Rest Breaks:

1. Consistent Lack of Breaks: Employees routinely miss meal periods or rest breaks due to heavy workload, leading to inadequate breaks throughout the workday.
2. Inadequate Coverage: Employers do not provide sufficient staffing to allow employees to take their required breaks.
3. Pressure to Skip Breaks: Employees feel pressured to skip breaks to meet tight deadlines or maintain productivity.
4. Uninterrupted Work: Employees are consistently unable to take meal breaks due to being engaged in work tasks throughout their shifts.
5. Lack of Break Facilities: Employers do not provide appropriate spaces or facilities for employees to take their breaks.
6. Ignoring Employee Requests: Employers ignore employee requests to take breaks or fail to provide opportunities for breaks.
7. Shortened Breaks: Employees are given less time for breaks than legally mandated (e.g., less than 30 minutes for a meal break).
8. Improper Break Timing: Employees are not provided breaks at appropriate intervals, leading to missed opportunities for rest.
9. Mandatory On-Duty Breaks: Employers require employees to remain on duty during their meal periods, preventing them from truly taking a break.
10. Inaccurate Timekeeping: Employers manipulate time records to show that employees took breaks when the employee did not.
11. Discouraging Breaks: Employers create an environment where taking breaks is discouraged or looked down upon.
12. Lack of Policies: Employers do not have clear policies in place regarding meal and rest breaks, leading to inconsistencies.
13. Missing Wage Statement Category: Wage statements do not contain a missed meal period or missed rest break premium hour category.
14. Invalid Meal Period Waivers: Employers will sometimes ask employees to sign a “meal period waiver” that allows the employee to take a meal break “on the clock,” meaning the employee is not relieved of all job duties. However, meal period waivers are valid if and only if because of the nature of the work, it is impractical to relieve the employee for a 30-minute meal period. A classic example is the nighttime security guard – because the guard is the only person on site after regular business hours, it is impractical to relieve the employee in the middle of the night for a 30-minute meal period. In that circumstance, a meal period waiver is valid and enforceable. Nevertheless, meal period waivers are a common source of unlawful employee exploitation.

California Minimum Wage Mandate #5 Employers Must Pay Reporting Time Pay:  

• Each workday an employee is required to report to work but is not put to work or is furnished with less than half of his or her usual or scheduled day’s work, he or she must be paid for half the usual or scheduled day’s work, but in no event for less than two hours nor more than four hours, at his or her regular rate of pay.

See California Code Regs. Tit. 8, § 11070

RED FLAGS that an employer is committing WAGE THEFT by failing to pay Reporting Time Pay:

1. Last-Minute Schedule Changes: Employers frequently change employees’ schedules at the last minute, resulting in reduced work hours and lost wages.
2. Not Meeting Minimum Hours: Employees are scheduled for a certain number of hours but sent home early, resulting in fewer hours worked than anticipated.
3. Lack of Advanced Notice: Employers do not provide the required advanced notice of schedule changes or cancellations, leading to lost income.
4. Failure to Reach Thresholds: Employees are scheduled for less time than the legal threshold required for reporting time pay (e.g., less than half of their regular shift).
5. Inadequate Communication: Employers do not communicate schedule changes or cancellations to employees, leading to confusion and unpaid hours.
6. No Call-In Pay: Employees are required to call in to check if they’re needed for work but are not compensated for this effort.
7. Lack of Transparency: Employers do not clearly outline the reporting time pay policy, leading to confusion among employees.

Section 2 of 5:  Failure to Correctly Pay California Overtime Pay

In California, eligible non-exempt employees are entitled to overtime pay at a rate of one and a half times their regular hourly wage for hours worked beyond 8 hours in a workday or 40 hours in a workweek. For those who work more than 12 hours in a single workday, or for hours worked beyond 8 hours on the seventh consecutive workday in a workweek, double the regular hourly wage is mandated as double-time pay.

California Overtime Pay Mandate #1: Hourly wage employees must be classified as non-exempt in order to be rightfully compensated with overtime wages:

• Employers must properly classify employees as non-exempt UNLESS they meet the legal standard for an exempt employee.

See California Labor Code §§ 510, 551-552, 1198

RED FLAGS that an employer is committing Overtime WAGE THEFT through misclassification:

1. Title Manipulation: Giving non-exempt employees titles like “manager” or “supervisor” to suggest exempt status.
2. Salary Misclassification: Paying non-exempt employees a fixed salary regardless of hours worked.
3. Misleading Job Descriptions: Crafting job descriptions to appear more managerial than the actual duties entail.
4. Incorrect Classification of Job Duties: Labeling jobs as exempt even if they don’t meet the criteria for exemption.
5. Incomplete Documentation: Failing to keep accurate records of hours worked to obscure overtime violations.
6. Inflated Salary Requirement: Paying just above the salary threshold for exempt status without considering job duties.
7. Misclassification of Non-Management Employees: Wrongfully classifying non-managerial employees as exempt.
8. Confusing Independent Judgment: Misrepresenting routine tasks as involving independent judgment to justify exemption.
9. Threats of Retaliation: Warning employees that questioning their classification could lead to job loss.
10. Blanket Exemption: Applying the same exemption to all employees within a certain job title without regard to actual duties.

California Overtime Pay Mandate #2: Employees must receive 1.5x their regular rate of pay for overtime.

• California employers must pay overtime as follows:

• Over 8 hours in a workday: Employees are entitled to 1.5 times their regular rate of pay for each hour worked beyond 8 hours in a single workday.

• Over 40 hours in a workweek: Employees are entitled to 1.5 times their regular rate of pay for each hour worked beyond 40 hours in a single workweek.

See California Labor Code §§ 510, 551-552, 1198

RED FLAGS that an employer is committing overtime WAGE THEFT by failing to pay 1.5x the employee’s hourly rate when applicable by California overtime laws:

1. Paying Straight Time for All Hours: Not paying the required overtime rate for hours worked beyond the standard workday or week.
2. Off-the-Clock Work: Employers might pressure employees to work “off the clock” before or after their scheduled shifts, during breaks, or during lunchtime, without compensating them for the additional time worked.
3. Flat Day Rates: Paying a fixed amount per day regardless of the actual hours worked, which can lead to underpayment of overtime.
4. Weekly Lump Sum: Paying a single weekly amount regardless of hours worked, ignoring overtime requirements.
5. Overtime Banking: Promising compensatory time off instead of overtime pay, without proper calculation or approval.
6. Policies Against Overtime: Enforcing policies that prohibit overtime without prior approval, effectively forcing unpaid off-the-clock work.
7. Shifting Workweeks: Employers might manipulate workweek schedules to avoid paying overtime. For example, they may adjust workweek start and end dates to minimize the number of hours that fall within the overtime threshold.
8. Employee Misinformation: Some employers might misinform employees about their rights to overtime pay, convincing them that they are not eligible or that their overtime hours won’t be compensated.
9. Improper Commission Structures: For employees who earn commissions, employers might design compensation structures that do not adequately account for overtime hours worked.
10. Mandatory Off-the-Clock Training: Requiring employees to undergo training sessions or meetings without compensating them for their time can also be a way to avoid paying overtime.
11. Unlawful Time Rounding: Employers may manipulate time records by rounding down actual hours worked, leading to potential loss of overtime pay.

California Overtime Pay Mandate #3: Employers are prohibited from using Non-Discretionary Bonuses to avoid paying overtime pay.

• Some employers might attempt to underpay overtime by using discretionary and non-discretionary bonuses in ways that can potentially violate California’s labor regulations. It’s crucial for both employers and employees to understand the distinction between these two types of bonuses and how they can impact overtime pay.

• Discretionary Bonuses: A discretionary bonus is one that is given at the sole discretion of the employer, and the amount and timing of the bonus are not predetermined or promised. In California, discretionary bonuses do not need to be factored into the calculation of overtime pay. This means that if an employer gives an employee a discretionary bonus, it generally won’t be considered when determining the employee’s regular rate of pay for overtime calculations.Example: If an employer provides a surprise holiday bonus to an employee without any prior agreement or promise, this bonus is likely to be considered discretionary and won’t affect the overtime calculation.

• Non-Discretionary Bonuses: Non-discretionary bonuses, on the other hand, are bonuses that are agreed upon in advance and are typically based on factors like productivity, performance, attendance, or other predetermined criteria. These bonuses must be factored into “regular rate of pay” for the calculation of overtime pay for eligible employees.Example: If an employee’s employment contract states that they will receive a monthly bonus of $200 for meeting certain performance targets, this is a non-discretionary bonus that should be included in the calculation of their regular rate of pay when determining overtime pay.

• Non-discretionary bonuses are subject to being included in an employee’s regular rate of pay for the purpose of calculating overtime pay for the pay period in which the bonus is earned.

RED FLAGS that an employer is committing WAGE THEFT by misclassifying non-discretionary bonuses as discretionary.

1. Consistency in Bonuses: If the employer consistently provides automatic bonuses to employees based on certain criteria, such as productivity, performance, or meeting specific targets, these bonuses are likely non-discretionary and should be included in the regular rate of pay when determining overtime wages.
2. Predetermined Criteria: If the employer has established predetermined criteria for awarding bonuses and these criteria are not subject to the employer’s sole discretion, the bonuses are more likely non-discretionary.
3. Regular Timing: If the bonuses are provided on a regular basis, such as monthly or quarterly, and are tied to the employee’s performance or other objective measures, they are less likely to be discretionary.
4. Written Policies: If the employer has written policies or guidelines outlining the conditions under which bonuses are awarded, and these conditions are not purely at the employer’s discretion, it suggests that the bonuses are non-discretionary.
5. Regular Communication: If the employer communicates to employees that they will receive bonuses based on specific criteria, this indicates that the bonuses are not truly discretionary.
6. Lack of True Discretion: If the employer consistently provides bonuses to all eligible employees pursuant to a known formula without exercising genuine discretion in deciding who receives them, it suggests that the bonuses are non-discretionary.
7. Lack of Flexibility: Discretionary bonuses should be unpredictable and not based on any set formula or criteria. If the bonuses are consistently awarded based on a fixed formula, they are likely non-discretionary. If the bonus is unexpected, that tends to show it is discretionary.
8. Employees’ Expectations: If employees expect to receive bonuses based on their performance or certain criteria, it indicates that the bonuses are not discretionary.
9. Documentation: If there is clear documentation, such as emails, correspondence, or employment contracts, that outlines the non-discretionary nature of the bonuses, this can be used as evidence that the employer is aware of their obligation to include the bonuses in overtime calculations.

Section 3 of 5:  Failure to Legally Provide 30 Minute Meal Periods and 10-Minute Rest Breaks

In California, employers have a legal responsibility to provide their non-exempt employees with 30 Minute Meal Periods and 10-minute Rest Breaks as a vital aspect of workplace fairness and employee well-being.

California 30 Minute Meal Period and 10 Minute Rest Break Mandate: Employee’s Must Receive One Hour of Regular Rate of Pay for Missed Meal Periods or Rest Breaks 

• 30 Minute Meal Periods:

California law requires employers to provide non-exempt employees with a 30-minute uninterrupted meal break for every 5 hours of work. If an employee’s workday is 10 hours or more, a second 30-minute meal break is required. During these meal breaks, employees must be relieved of all work duties and be free to use the time as they choose, including leaving the workplace if they desire.

• 10-Minute Rest Breaks:

Similarly, employees in California are entitled to 10-minute paid rest breaks for every 4 hours worked or major fraction thereof. These breaks are designed to allow employees to rest and recharge during their shifts. However, it is crucial to note that rest breaks should not be combined or used to extend meal periods.

• Premium Hour Owed to Employees for Missed Meal Periods and Rest Breaks

When an employer does not legally provide a 30-minute meal period or 10-minute rest period to a non-exempt employee, they are considered to have violated labor laws. As a result, the employer is required to provide the affected employee with compensation in the form of one additional hour of pay at the employee’s regular rate. This additional pay is referred to as “premium pay” or “meal period premium” AND it must be provided in the employee’s corresponding paycheck for the current pay period.

RED FLAGS that an employer is committing WAGE THEFT by failing to legally provide Meal Periods or Rest Breaks and MAY owe the employees “premium hours”:

1. Denying or Failing to Make Available: Not providing employees with the opportunity to take their mandated meal periods or rest breaks.
2. Requiring Employee Report: Requiring the employee, rather than employer, to identify andreport missed meal periods tends to show the employer is neglecting its affirmative duty to monitor and ensure employees are taking timely and complete meal period breaks.
3. Interrupted Meal Periods and Rest Breaks: Allowing work-related interruptions during meal and rest breaks, which prevents employees from fully enjoying their break time.
4. Failure to Properly Relieve Employees from Duties: Requiring employees to remain on-call or perform work-related tasks during their breaks, effectively depriving them of their rightful time off.
5. Shortened Meal Periods and Rest Breaks: Allowing employees to take breaks that are shorter than the legally required duration.
6. Misclassifying Employees: Incorrectly categorizing employees as exempt from meal and rest break requirements when they are non-exempt.
7. Failure to Document: Neglecting to accurately record meal periods and rest breaks in time records, which can lead to disputes over break times.
8. Failure to Pay Premium Hours: Not compensating employees with an additional hour of pay for each missed meal period or rest break, as mandated by law.
9. Pressure to Waive Breaks: Encouraging or pressuring employees to waive their meal breaks, even though waivers must be voluntary and written.
10. Back-to-Back Breaks: Scheduling meal periods or rest breaks immediately before or after another break, effectively depriving employees of adequate rest.
11. Lack of Policy Communication: Failing to communicate clear policies about meal and rest breaks to employees.

Section 4 of 5:  Failure to Pay for All Hours Worked or Forcing Employees to Work “Off the Clock”

Employers are strictly prohibited from forcing employees to work off the clock – a practice that undermines the integrity of fair compensation and employee well-being. Off-the-clock work involves tasks performed outside of official working hours for which an employee is not compensated. This can include answering emails, taking work-related calls, or completing assignments that extend beyond the standard workday.

RED FLAGS that an employer is committing WAGE THEFT by failing to PAY an employee for all hours worked:

1. Forcing Employees to Work Off the Clock: Requiring employees to work before or after their scheduled shifts without proper compensation.
2. Failure to Pay Travel or Commute Time: When an employer instructs an employee to report to a remote location and does not compensate the employee for time spent traveling to and from the remote location.
3. Control Before Clocking In: If an employer requires employees to arrive early to boot up their computers, set up workstations, or perform other job-related tasks without paying them for this pre-shift time.
4. Mandatory Company Shuttle: When an employer mandates the use of a company shuttle to transport employees to a worksite but does not count this travel time as paid working hours.
5. Distant Timeclock Location: If an employer places the timeclock or clock-in system a considerable distance away from the workspace, forcing employees to spend unpaid time walking to or from the timeclock.
6. Unpaid Training: Failing to compensate employees for mandatory training sessions conducted outside regular working hours.
7. Pre and Post Shifts: Not paying employees for the time spent preparing for work before the shift starts or wrapping up tasks after it ends.
8. Donning and Doffing: Not compensating employees for time spent putting on or taking off required work attire or gear.
9. Policies Against Overtime: Enforcing policies that prohibit overtime without prior approval, effectively forcing unpaid off-the-clock work.
10. Responding to Emails After Work: Expecting employees to handle work-related emails or tasks during their personal time without pay.
11. Travel Time: Failing to compensate employees for time spent traveling for work-related purposes, such as commuting to different locations.
12. Meetings: Not compensating employees for time spent in mandatory meetings that occur outside regular working hours.
13. Counseling and Discipline: Requiring employees to attend disciplinary or counseling sessions without compensating them for their time.

Section 5 of 5:  Illegal Paycheck Deductions

The laws surrounding paycheck deductions in California are designed to shield you from unfair and unauthorized reductions in your earnings.

RED FLAGS that an employer is committing WAGE THEFT by making illegal deductions from employees’ paychecks:

1. Cash Register Shortages: Deducting money from employees’ paychecks to cover cash register shortages without proper evidence violates California labor laws.
2. Damage to Property: Charging employees for damages to company property without their consent and appropriate evidence is considered wage theft.
3. Paycheck Advance Repayment Errors: Incorrectly deducting more than the agreed-upon amount for paycheck advances is illegal under California wage regulations.  Employers are prohibited from deducting more than 20% of a payroll advance from a single paycheck.
4. Balance of Paycheck Loans at Separation: Unlawfully deducting outstanding paycheck loan balances from an employee’s final paycheck upon separation goes against California labor regulations.
5. Interest or Fees for Paycheck Advance: Charging interest or excessive fees on paycheck advances or loans is not allowed under California wage and hour laws.
6. Uniform Expenses: Forcing employees to pay for uniforms, including mandatory purchases from the employer, without proper reimbursement is wage theft.
7. Tools and Equipment Costs: Deducting costs for tools or equipment needed to perform the job, pushing wages below the legal minimum, is against California wage laws.
8. Wage Garnishments Without Court Order: Employers cannot garnish wages without a court order, and doing so constitutes wage theft in California.
9. Safety Gear Expenses: Making employees pay for safety gear necessary for their job, causing their wages to dip below the legal minimum, is prohibited.
10. Illegal Drug or Alcohol Testing Fees: Charging employees for drug or alcohol testing without proper authorization is considered wage theft.
11. Uniform Maintenance Costs: Requiring employees to cover the cost of uniform maintenance in a way that violates minimum wage laws is wage theft.

Contact The Ruggles Law Firm For Wage Theft Legal Assistance

Matt Ruggles has litigated scores of wage theft lawsuits from both sides – for decades as a defense attorney at one of the largest law firms on Earth; and since 2017 representing employees who have been wronged by their corporate employers.  Matt has recovered millions of dollars from large and small corporations, partnerships, and limited liability companies and individuals that broke California law by failing to properly pay wages to their employees.  At the Ruggles Law Firm, we believe that informed individuals can confidently take the necessary steps to reclaim their hard-earned wages and protect their rights in the workplace. Get in contact today.