...
Summary of differences between federal and state regulations
The federal Fair Labor Standards Act contains certain provisions in regard to compensation in terms of minimum wage, overtime, child labor and recordkeeping requirements. Corresponding state provisions will be found under those topic areas. States are free to adopt additional provisions that are not regulated by the federal government such as frequency of payday and wage deductions. These provisions are discussed in this section.
California has the following laws regarding compensation:
Insufficient funds
If an employer pays wages to an employee by check drawn on a closed account or an account with insufficient funds, the employer must pay a penalty unless the employer can prove the violation was unintentional. Cal. Labor Code §203.1
Frequency of payday
All wages are payable twice during each calendar month. Salaries of executive, administrative and professional employees covered by the Fair Labor Standards Act are payable once a month before the 26th day of the month if the entire month’s wages are included. All wages for overtime are to be paid on the payday of the next regular pay period. Cal. Labor Code §204
Notice of pay rates and manner
Effective January 1, 2012, employers must provide each employee, at the time of hiring, with a notice that specifies the rate and the basis, whether hourly, salary, commission, or otherwise, of the employee's wages and to notify each employee in writing of any changes to that information within seven calendar days of the changes unless such changes are reflected on a timely wage statement or another writing, as specified. No notice is required for an employee who is employed by the state or any subdivision thereof, exempt from the payment of overtime, or covered by a collective bargaining agreement containing specified information. (Labor Code 2810.5)
Commission payments
By January 1, 2013, whenever an employer enters into a contract with an employee for services to be rendered within this state and the contemplated method of payment involves commissions, the contract shall be in writing and shall set forth the method by which the commissions shall be computed and paid. The employer shall give a signed copy of the contract to every employee who is a party thereto and shall obtain a signed receipt for the contract from each employee. In the case of a contract that expires and where the parties nevertheless continue to work under the terms of the expired contract, the contract terms are presumed to remain in full force and effect until the contract is superseded or employment is terminated by either party. Cal. Labor Code 2751
Compensatory time off
In lieu of overtime pay, an employee may receive compensatory time off at the rate of one and one-half hours for each hour of overtime worked. There is a limit of 240 hours that may be accrued. The employee can elect to be paid rather than have the time off. Cal. Labor Code §204.3
Wage deductions
It is unlawful for an employer to hold onto part of an employee’s agreed-upon wages. Exceptions are where an employer is required or empowered by law or authorized in writing by the employee. Cal. Labor Code §222 - 224
Itemized statement
Every employer must, semimonthly or at the time payment for wages is made, furnish employees with an itemized statement to include, among other things, gross wages, total hours worked (for non-exempt employees), number of piece-rate units earned, all deductions, net wages, dates of the pay period, and hourly rates in effect. Temporary services employers must also provide itemized statements to employees regarding assignments. These statements are to include the rate of pay, the total hours worked, and the temporary services employer's information. Cal. Labor Code §226.
However, it is acceptable if hours worked in excess of the normal work period during the current pay period are itemized as corrections on the paystub for the next regular pay period. Any corrections set out in a subsequently issued paystub must state the inclusive dates of the pay period for which the employer is correcting its initial report of hours worked. This is, of course, barring a collective bargaining agreement. Cal. Labor Code §204
Deduction for medical exam
An employer may not deduct from an employee’s wages the cost of a medical examination required by the employer. Cal. Labor Code §222.5
Deduction for tardiness
A deduction of 30 minutes’ wages is allowed for tardiness of less than 30 minutes, but total deduction for tardiness can not be greater than the proportion of time lost. Cal. Labor Code §2928
Rounding
In Camp v. Home Depot USA, Inc., the CA Court of Appeals ruled in November 2022 that employers that “can capture and [have] captured the exact amount of time an employee has worked during a shift" must pay employees for all the time worked, and not round off the time worked, even if rounding off is neutral. If, for example, you capture time worked by the minute, you pay employees by the minute and not round off to the nearest quarter hour.
Deduction for loss
No employer shall make any deduction from wages for any cash shortage, breakage, or loss of equipment, unless it can be shown that it was caused by the employee’s dishonest or willful act or gross negligence. Cal. Wage Order
State
Contact
California Department of Industrial Relations
Regulations
California Labor Code §§200-244
Deduction for tardiness
California Labor Code §2920-2929
Deduction for loss
California Industrial Welfare Commission Wage Order No.8-2001(8)
Federal
Contacts
None.
Regulations
None.