Avoiding Wage and Hour Violations in California

California has some of the most stringent wage and hour laws in the country, and employers must stay compliant to avoid costly penalties and legal disputes. The complexity of state labor laws, combined with frequent legislative updates, makes it essential for businesses to remain informed about their obligations. 

For employers, failing to follow wage and hour laws can lead to lawsuits, government investigations, and reputational damage. Understanding these regulations and implementing best practices is crucial for maintaining a lawful and efficient workplace. Chauvel & Glatt can audit your workplace practices to ensure you are California Labor Compliant. 

Understanding California’s Wage and Hour Laws

California’s labor laws generally offer greater protections to employees than federal laws under the Fair Labor Standards Act (FLSA). When state and federal laws differ, employers must follow the law that provides the highest level of benefits to employees.

For example, California’s minimum wage is always higher than the federal minimum wage. Additionally, California has unique rules regarding overtime, breaks, and employee classification that differ significantly from federal standards. Key wage and hour laws California employers must understand include but are not limited to:

Minimum Wage Requirements

California’s minimum wage varies depending on county and even local ordinances. As of 2025, the statewide minimum wage is $16.50 per hour for all employers, regardless of size. 

Many cities and counties, such as San Francisco and Los Angeles, have higher minimum wage rates. Employers must follow the local minimum wage if it exceeds the state rate. Employers should monitor updates to local and state minimum wage laws and adjust payroll accordingly.

Overtime Rules in California

California’s standard overtime laws are also stricter than federal requirements. Employers must pay overtime as follows:

• 1.5 times the regular pay rate for hours worked over 8 hours in a single workday, or over 40 in a workweek, and the first 8 hours on the seventh consecutive workday in a workweek.
• 2 times the regular pay rate for hours worked over 12 in a single workday and or over 8 hours worked on the seventh consecutive workday in a workweek.

Meal and Rest Break Laws

California requires employers to provide unpaid meal breaks as follows:

• A30-minute meal break by the end of the 5th hour of work.
• A second 30-minute meal break if the employee works more than 10 hours in that same workday.

If an employee is not given a compliant meal break, the employer must pay an additional one hour of pay as a penalty for each missed break.

Similarly, employees are entitled to a paid 10-minute rest break for every four hours worked. Rest breaks should be provided in the middle of the work period whenever possible, and uninterrupted and free from work duties. Failing to provide proper meal and rest breaks can lead to wage claims, class-action lawsuits, and significant financial penalties.

Common Wage Violations and How to Avoid Them

California employers must comply with some of the nation’s strictest wage and hour laws. Even unintentional violations can lead to costly penalties, employee lawsuits, and government enforcement actions. Understanding the most common violations can help businesses avoid legal risks and ensure compliance with state labor laws.

Misclassifying Employees as Exempt or Independent Contractors

One of the most frequent and expensive mistakes employers make is misclassifying employees as either exempt from wage and hour laws or as independent contractors rather than employees.

Exempt vs. Nonexempt Employees

To be classified as exempt, an employee must meet both a salary threshold and a job duties test under California law. Exempt employees are not entitled to overtime pay, meal and rest breaks, or certain wage protections. As of 2025, exempt employees must earn at least $68,640 annually and primarily perform executive, administrative, or professional duties which is a legal analysis.Employers that misclassify employees as exempt without meeting these requirements can face liability for unpaid overtime, break penalties, and other damages.

To avoid misclassification, employers in consultation with their legal advisor should regularly review job classifications to ensure employees meet both the salary and duties tests. If unsure, it is safer to classify workers as nonexempt to ensure compliance with wage and hour laws. HR teams and supervisors should receive training on these distinctions to prevent costly errors.

Improper Handling of Final Paychecks and Accrued Vacation Pay

California has strict rules on when an employee must receive their final paycheck. Missing these deadlines can lead to waiting time penalties, requiring employers to pay one day’s wages for each day the final paycheck is late, up to 30 days.

Terminated employees must receive their final paycheck immediately upon termination. Employees who resign with at least 72 hours’ notice must be paid on their last day, while those who quit without notice must receive final wages within 72 hours. Final paychecks must include all wages earned through the last day worked, including unpaid overtime and commissions, as well as accrued, unused vacation pay, which California considers earned wages. Employers cannot delay or withhold payment by requiring employees to return company property first.

To stay compliant, businesses should prepare final paychecks in advance for planned terminations or resignations with notice. HR and payroll teams should be trained to issue final checks on time and ensure vacation pay is included when applicable.

Failing to Reimburse Business Expenses

California law prohibits employers from shifting business costs onto employees. Under Labor Code Section 2802, businesses must reimburse workers for all necessary expenses incurred on the job.

Reimbursable expenses include cell phone and internet costs when used for work purposes, mileage and travel expenses for personal vehicles used on the job (reimbursed at the IRS rate of 70 cents per mile in 2025), and remote work expenses such as office supplies, printers, and required software.

Employers should implement a clear reimbursement policy that specifies eligible expenses and requires employees to submit reimbursement requests with documentation. Regular audits of reimbursement payments help ensure compliance and prevent potential wage claims.

Wage and hour violations can result in costly penalties, lawsuits, and reputational damage. Employers can mitigate risks by properly classifying employees, issuing final paychecks on time, and reimbursing all necessary business expenses. Proactive compliance measures, such as regular audits and HR training, help businesses avoid disputes and maintain a lawful workplace. Consulting an experienced employment attorney can provide additional guidance on wage and hour compliance, ensuring businesses remain protected.

What to Do If Faced with a Wage and Hour Claim

Despite an employer’s best efforts, wage and hour claims can still arise. Whether due to an oversight, a misunderstanding, or an intentional violation, these claims can lead to significant financial penalties and reputational damage. Employers must act quickly and strategically to address wage disputes and minimize liability.

Steps to Take If an Employee Files a Wage Claim with the California Labor Commissioner’s Office

1. Review the Claim Carefully: When an employee files a wage claim with the California Labor Commissioner’s Office (DLSE), employers receive a notification outlining the alleged violation. Carefully review the details, including the time period covered, the employee’s allegations, and any requested payments.
2. Gather Relevant Records: Accurate recordkeeping is critical, as California law generally favors employees when employers lack documentation. Employers should immediately collect all relevant documentation, including time records, payroll data, meal and rest break logs, employment agreements, or handbooks.
3. Assess the Validity of the Claim: Employers should evaluate whether the claim has merit by comparing the allegations with available records. If a mistake was made, it may be best to settle early. If the claim is unfounded, employers should prepare a strong defense. This is something that should be considered in consultation with an employment attorney. 
4. Respond to the DLSE Notice: Employers typically have 10 days to respond to a wage claim. This response should be thorough and supported by clear documentation. Employers can dispute claims by demonstrating compliance or correcting any discrepancies.
5. Prepare for the Settlement Conference: The DLSE will often schedule a settlement conference to resolve the dispute informally. Employers should bring all relevant records to the conference and be prepared to negotiate if appropriate. In addition, employers may choose to seek legal representation to ensure they don’t unknowingly admit to liability.
6. Defend Against a Formal Hearing: If no settlement is reached, the case proceeds to a formal hearing before a Labor Commissioner’s hearing officer. Employers must present evidence, call witnesses if needed, and make legal arguments supporting their position.
7. Comply with the Final Decision: If the Labor Commissioner rules in favor of the employee, the employer may be required to pay back wages, penalties, and interest. If the employer disagrees with the ruling, they may file an appeal in civil court.

How the California Labor Commissioner Handles Disputes

The California Division of Labor Standards Enforcement (DLSE) oversees wage and hour claims, investigating complaints and enforcing state labor laws. The DLSE process generally follows these steps:

• Filing of a Claim: Employees file complaints for unpaid wages, missed breaks, overtime violations, or improper classification.
• Notification and Response: Employers receive notice and must respond within 10 days.
• Settlement Conference: The DLSE attempts to resolve the dispute through negotiation.
• Formal Hearing: If no settlement is reached, a hearing officer reviews the evidence and makes a legally binding decision.
• Enforcement of Judgment: If the employer is found liable, they must pay or appeal within 10 days.

Failure to comply with a DLSE decision can lead to wage garnishments, liens, and additional penalties.

Preventative Measures to Reduce Legal Risks and Financial Penalties

Employers can take several proactive steps to minimize the risk of wage and hour claims:

• Maintain Accurate Records: Keep precise time and payroll records for at least four years to defend against claims.
• Regularly Audit Payroll Practices: Periodic compliance reviews can help catch and correct errors before they become legal issues.
• Train Managers and Supervisors: Ensure managers understand wage laws, including overtime and break requirements, to prevent unintentional violations.
• Clearly Define Policies in Employee Handbooks: A well-drafted employee handbook should outline meal breaks, overtime procedures, and timekeeping policies. The handbook should also be updated each year to ensure that all policies are up to date. 
• Work with a Skilled Attorney: Consulting an employment attorney can help employers navigate California’s complex labor laws and respond effectively to claims.

By implementing these measures, employers can significantly reduce their exposure to wage and hour disputes.

Seek Professional Legal Counsel for Complex Wage and Hour Issues

California’s wage and hour laws are among the strictest in the nation, requiring employers to be diligent in their compliance efforts. From correctly classifying employees to ensuring proper overtime pay and break periods, the risks of noncompliance are high. Employers who fail to follow the law face lawsuits, costly penalties, and damage to their business reputation.

To avoid these risks, businesses should:

• Stay informed about legal updates affecting wage and hour compliance.
• Implement robust timekeeping and payroll systems to track employee work hours and breaks.
• Train managers and HR personnel to enforce compliance policies consistently.
• Seek legal counsel to ensure policies and practices align with current laws.

Proactive compliance is the best strategy for avoiding  and minimizing your risk against wage and hour disputes. By taking preventative steps, maintaining accurate records, and responding appropriately to claims, employers can protect their businesses and foster a fair, law-abiding workplace.

For organizations seeking help with wage and hour requirements in California, the professional employment law attorneys at Chauvel & Glatt, LLP, are available for consultation. Chauvel & Glatt, LLP attorneys are dedicated to representing employers – never employees. These skilled lawyers can advise California businesses on the most effective way to protect against wage and hour claims and represent companies should claims be filed. To learn more about how Chauvel & Glatt, LLP, may assist your organization, schedule your consultation today. 

The content of this blog is provided for informational purposes only and is not intended as legal advice. Every legal matter is unique, and the information presented here may not apply to your specific situation. Reading this blog does not create an attorney-client relationship between you and Chauvel & Glatt, LLP. For personalized legal assistance or advice, please contact a qualified attorney. If you would like to discuss your legal needs, we invite you to contact our office to schedule a consultation.