Wage hour class action litigation is presenting an existential threat to many California businesses big and small. It only takes one former disgruntled employee to claim they did not get all of their overtime, meal or rest periods to place a company at risk for a wage hour class action lawsuit that implicates all of a company’s hourly (and potentially even salaried employees who may be misclassified) for the prior four years of a company’s operations. Failure to have time cards that accurately reflect an employee’s hours actually worked as well as accurately recording the employee’s having taken legally compliant meal periods can wind up costing a company hundreds of thousands if not millions of dollars in claims for wages and penalties along with the expense of both the attorney’s fees necessary to defend the company as well as the attorney’s fees of the plaintiff in the event the plaintiff prevails.
While potential liability for unpaid overtime may be obvious to most employers, many employers do not realize that a failure to provide full time hourly employees with a 30 minute meal period that commences within the first five hours of work renders a company liable for a meal period penalty of one hour’s wage for each meal period not made available to the employee. Additionally, failing to provide an employee with the availability to take one ten minute rest period for every four hours of work can also subject an employer liable for a one hour rest period penalty for each day an employee is not provided with such rest periods. Moreover, a failure on the part of an employer to pay all overtime owed to the employee and/or provide compliant meal and rest periods can subject an employer to potentially devastating penalties including but not limited to waiting time penalties of up to 30 day’s wages as well as penalties for inaccurate wage statements and penalties under the Private Attorney General Act otherwise known as PAGA. Often times these penalties can dwarf the amount of potential wage liability owed by the employer. Finally, attorney’s fees in these case can be significant and what’s worse is if the employer loses the employer has to pay the plaintiff employee’s legal fees.
Because of these risks, it is essential to engage in defensive time card practices with an employer’s hourly employees to make sure you have an accurate record of the employee’s work hours and a record of the employer providing and making available legally compliant meal and rest periods. These practices are easy to do and they can literally help save a company from millions in liability or worse, the destruction of a company’s business. Here is a list of defensive time card practices that I believe every employer in California should utilize:
Have each employee review their time card each pay period before the time is submitted to payroll before processing. If the time card is missing punches for lunch or missing arrival time or end of the day punches this is the time to have the employee (not the manager) fill in those punches. If the employee fills in missing punches, have the employee initial in their own handwriting, each punch they filled in. If you are using a computer based time keeping system, print out each individual employee’s time for the pay period and have them review it and fill in the missing punches on the paper time report. Alternatively, some timekeeping software now has the ability for the employee to enter their employee ID and password and then enter the missing punches electronically while at the same time capturing their electronic “signature” authorizing the change.
If an employee indicates that the time on their time card is inaccurate, this is the time to have the employee correct the inaccuracy and again initial their authorization for the change either on the paper time card printout/card or through their electronic authorization. Do not have managers make these changes as this can often lead to allegations that the employer is engaging in unauthorized changes to the employee’s time otherwise known as time shaving.
Have the employee’s time card imprinted with an acknowledgement that the employee will sign confirming that they employee has reviewed their timecard and that all of the entries are true and correct. The acknowledgement should also contain language that the employee had made available to them all of their legally required meal and rest periods and if they did not take a meal or rest period it was the employee’s voluntary choice. This is especially important as to rest period since employees do not punch for rest periods. Absent such a signed a time card, the employer has no proof that they employee ever had rest periods made available to them. Further, the existence of such a signed acknowledgement will make it much harder for the employee to later claim that they were not paid all of their overtime or provided all of their meal and rest periods.
By requiring the employees to review their own time, authorize any changes to their own time and acknowledge that their time and their having breaks made available was accurate, companies will have a much better fighting chance to avoid the perils of class action liability exposure.
Bob Yonowitz is a partner in the Irvine office of the national law firm of Fisher Phillips, one of the oldest and largest firms in the country practicing exclusively in labor and employment law representing management. Yonowitz has been practicing labor and employment law representing management since graduating with honors from the George Washington University National Law Center in 1987, where he was a member of the George Washington Law Review. Prior to practicing law, he also worked for the United States Senate Judiciary Committee Subcommittee on Courts. For further information or if you have any questions, contact the author at ryonowitz@fisherphillips.com.