California Labor Law FAQs ::
Meal Breaks, Overtime Pay Laws, Mandatory Rest Breaks Ca

Am I an independent contractor?
What work time do I have to be compensated for?
If I receive tips on the job, do I have to share them with my employer or supervisor?
When am I required to have rest and meal breaks on the job?
When can my employer require that I lose my vacation pay?

Am I an independent contractor or an employee and does it make a difference?

Whether a worker is an "employee" or an "independent contractor" makes a big difference. Independent contractors are not entitled to many benefits that must be offered to employees, such as overtime pay, health and pension benefits, social security credits, protection against discrimination, and unemployment insurance. Some employers wrongly classify their workers as "independent contractors" to avoid providing those benefits. It is in your best interest to know whether you are properly classified as an employee or independent contractor.

Recently, there have been some noteworthy cases where employers mistakenly classified employees as independent contractors. The Allstate Insurance Company announced that it agreed to pay $19.5 million to 292 agents who claimed the good hands people wrongly changed their status from "employees" to "independent contractors" . This settlement came after Allstate settled the claims of another 1,000 agents for $22 million. In another case, Microsoft agreed to pay $96.9 million to employees who contended that they were not temporary, independent contractors but really permanent employees of Microsoft.

Courts use different tests for workers for deciding different issues, but there are some common principles. In wage and hour cases, they focus on the following factors:

The degree of control the employer exercises over the day-to-day work performed;

The amount of the worker's investment in facilities and work equipment;

The degree to which the worker's independent initiative, judgment and planning is necessary for the success of the worker's operation;

The permanency of the relationship between the employer and the worker;

The extent to which the services are a part of the employer's business;

How dependent is the worker on the employer for continued work.

The courts will look to all the facts of a particular case and compare them to the appropriate factors. Thus, the employees should understand that an agreement that he or she is an independent contractor, though important, will not decide the case.

What work time do I have to be compensated for?

Employees must be paid their wages for all of their work time. Work time is any time spent engaged in work that benefits the employer in some way. This includes work at home, opening and closing duties, pre-shift and post-shift work, and anything that is considered "an integral and indispensable" part of the employee's principal work. For example, time spent sharpening knives by a butcher is "an integral and indispensable" part of the butcher's work.

An employee is at work all hours he or she is under their employer's control and cannot engage in private pursuits. A worker who has to wait until they have an assignment is working and must be compensated. Likewise, if an employee is on-call and has restrictions on the use of free time, then that employee should be considered at work.

Even for unauthorized overtime, an employee must be compensated. An employer cannot "accept the fruits of the employees' labor" without paying their employees. Therefore, policies such as "employees will not be paid for unapproved overtime" will not win in court.

Perhaps the worst violations occur when supervisors urge their employees to clock out and then continue work. Employers cannot escape liability by refusing to keep records of their employee's "off-the-clock" work. In such cases, the law allows the employee to use reasonable estimates to reconstruct their work time.

If I receive tips on the job, do I have to share them with my employer or supervisor?

In California, employers cannot share in tips or tip pools of their employees. Sometimes a supervisor or owner of a business takes a percentage or a fee out of their employee's tips. Even though this is practiced in restaurants, hotels, and casinos, this is strictly prohibited.

As in all other wage cases, an employee can recover attorney's fees in an action to recover tips.

Meal Breaks: When am I required to have rest and meal periods on the job?

California law provides that employees must receive a 30 minute meal break if they work in excess of five hours. During this time, the employee must be relieved of all duties because it cannot be a working lunch. If an employer fails to give a proper meal break, the employee can recover one hour of pay at their regular rate of pay for each day they are not provided a proper meal break.

There are exceptions to the rules regarding meal breaks. A bona fide "exempt" employee is not subject to this rule. If the work day is less than six hours, the employee can agree to waive the time period. In the health care industry, an employee can agree, in writing, to waive this meal period. Further, employees working under a collective bargaining agreement may not be subject to the rules regarding meal periods.

In some cases, an "on duty" meal break can be provided only when the nature of the job prevents the employee from being relieved of duty and if there is a written agreement between the employer and employee. The written agreement shall state that the employee may revoke the agreement at any time.

These rules only apply to employees in California. Federal law does not have a meal time requirement.

California labor law requires that employees get rest breaks if they work over three and a half hours a day. These mandatory breaks must be in the middle of each work period and must be 10 minutes for every four hours worked or fraction thereof. Rest breaks are work time and the employee must be paid for them.

If an employer fails to provide an employee a rest period, the employee can recover one hour of pay for each work day that the rest period is not provided.

An exception to the rule is made for bona fide "exempt" employees. They are not subject to this rule.

When can my employer require that I lose my vacation pay?

The answer is usually never. When a worker leaves his or her employment, all vested vacation pay must be paid out at the final rate of pay in accordance with the employer's vacation policies. Along these same lines, an employer cannot have a "use-it-or-lose-it" policy under which an employee forfeits accrued vacation time if not used by an anniversary date. On the other hand, an employer can cap or limit the amount of vacation time accrued.

Some employers can skirt the strict California law on vacations by establishing a funded vacation plan under the federal ERISA laws. However, some of these employers do not have vacation plans that comport with the requirements of ERISA, and therefore they are in blatant violation of California law. Obviously, an employee would need the assistance of an attorney to determine the official ERISA status of an employer.