Wage and Hour Practices

California Wage and Hour Practices

State vs. Federal Law: As a California employer, you are subject to labor laws and regulations from the state and federal governments and from other jurisdictions that legislate on employment matters. When these laws conflict, often there is no easy answer to the question of which law prevails. In general, you must follow the law most restrictive to the employer and most generous to the employee. In most instances, employers and unions cannot use the collective bargaining process to waive individual employee rights under state employment law even though that process is regulated by federal law.

California Wage Orders

California’s Department of Industrial Relations regulates wages and hours of nonexempt employees. DIR established an Industrial Welfare Commission, which created documents called Wage Orders. Wage Orders are numbered 1 through 17, with each number followed by the year in which the Wage Order was last amended and reprinted. The IWC is currently not in operation. The Division of Labor Standards Enforcement continues to enforce the provisions of the wage orders. In addition, wage and hour changes may be made through the legislative process. California employers must comply with 17 Wage Orders, plus a Minimum Wage Order, as well as any applicable statute. Each of the Wage Orders is specific to the industry or occupations it covers. Click here for a list of the Wage Orders.

Determining the Correct Wage Order: An industry, business or establishment must generally comply with the Wage Order applicable to the main purpose of the business, except Wage Order 5, Public Housekeeping Industry. Most large businesses conduct a variety of operations, but where they all tend to carry out a common business purpose under common general control, they are treated as one business.

Occupation Orders: If your business is not covered by a Wage Order, your employees normally are covered by an Occupation Order: Order 4-2001 (Professional, Technical, Clerical, Mechanical, and Similar Occupations), Order 14-2001 (Agricultural Occupations) or Order 15-2001 (Household Occupations).

Separate Units of Multipurpose Organizations: Some multipurpose organizations may consist of distinctly separate units. If the units are different, are operating for distinctly different business purposes and the operational management is organized separately at all levels, you can classify these units separately by division or establishment.

Employees Not Covered by Industry Orders: Most employers who are not covered by industry orders are engaged in listed or related occupations covered by Wage Order 4, Professional, Technical, Clerical, Mechanical and Similar Occupations. Several major types of businesses do not have industry-wide orders. The IWC treats these businesses as Wage Order 4 businesses. Some organizations and businesses that generally employ the classes of occupations covered by Wage Order 4 include banks, newspapers, public utilities, insurance companies and many others indicated in the listing of businesses by order. Industries and occupations not covered by Wage Orders 1 through 16 may be covered by Wage Order 17, Miscellaneous Employees. These may include newly emerging industries and jobs in high technology and other fields as they develop over time.

Businesses of a Mixed Nature: To avoid classification problems, businesses that engage in multiple activities should define their primary purpose. This does not mean auditing receipts to compare income from sales and services offered, but determining the nature of the business on the basis of simple observation and common sense.