California: Willful Wage and Hour Violations
All Employers with Employees in CA
March 3, 2023
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In Naranjo v. Spectrum Security Services, Inc., the California Court of Appeal said that an employer who can present evidence establishing a good faith belief that it complied with the final payment of wages law is not committing a willful violation and does not owe penalties. Here, Spectrum transported and guarded prisoners and detainers who required outside medical attention or had other appointments outside custodial facilities. A guard was suspended and later fired for leaving his post to take a meal period in violation of a policy that required custodial employees to remain on duty during all meal periods. The employee filed a class action alleging violations of state meal period requirements. As part of his claims, the employee sought premium pay for each day on which Spectrum failed to provide a legally compliant meal period.
In order to seek additional penalties and fees under California Labor Code §§ 203 and 226, plaintiffs must show the failure to pay certain wages was willful or knowing and intentional. In this case, the court said that a good faith dispute can prevent the collection of these penalties. In this case, Spectrum argued that it had a good faith belief that it was not violating any laws when it did not include meal period premiums on its wage statements, therefore it could not have knowingly and intentionally or willfully violated the law. Specifically, Spectrum argued that its officers perform much of their work at locations owned by the federal government, and the federal enclave doctrine prohibits the application of state laws to employees working at such locations. In addition, Spectrum also argued state regulations do not apply to its officers without express congressional authorization under the intergovernmental immunity doctrine. Because of these two beliefs, Spectrum did not provide premium pay or report it as earnings on wage statements. Employers should note that a minority of federal district courts in California do not agree that an employer’s good faith belief is sufficient to avoid a finding of knowing and intentional violation. Employers should consult with legal counsel if they believe they are exempt from any of the wage and hour requirements under the Labor Code.
- Review payroll and final pay procedures for compliance with wage and hour laws.
- Have appropriate personnel trained on meal period premium requirements.
- Consult with legal counsel regarding exemptions from wage and hour requirements.
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Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase