Tag: employment

Expanded paid sick leave under SB 1105 amends the Healthy Workplaces, Healthy Families Act, providing agricultural employees with enhanced access to time off for illness or preventive care

California Workers’ Rights Daily Digest – October 2, 2025

Today’s update spotlights emerging protections and upcoming events for low-wage workers in agriculture, warehousing, and construction. Drawing from state and advocacy sources, we highlight fresh legislative impacts, resources, and guidance to navigate workplace challenges.

Key Developments

  • Expanded paid sick leave under SB 1105 amends the Healthy Workplaces, Healthy Families Act, providing agricultural employees with enhanced access to time off for illness or preventive care—critical for seasonal farmworkers facing health risks.
  • New regulations address AI use in employment decisions, prohibiting biased algorithms in hiring or promotions, which could affect automated screening in warehousing and construction job applications.

Enforcement and Events

  • The Civil Rights Department is hosting an October 8 webinar on navigating criminal history in employment, offering strategies for workers with records to assert fair chance rights in low-wage hiring processes.
  • On October 22, join the United Against Hate webinar focusing on the Ralph Civil Rights Act, which protects against violence or intimidation at work—relevant for vulnerable sectors like agriculture.

Tips and Resources

  • For disaster-impacted workers (e.g., from recent LA fires), apply for extended unemployment assistance through labor.ca.gov; this supports recovery in fire-prone construction and ag areas.
  • Access free employment training programs via the Labor & Workforce Development Agency, as seen in recent grants for upskilling in manufacturing-adjacent roles like warehousing.
  • If facing AI-related hiring bias, consult calcivilrights.ca.gov for complaint guidance; advocacy groups like Legal Aid at Work offer helplines for low-wage workers.

Visit the linked sites for details and stay proactive. Fresh insights tomorrow!California Workers’ Rights Daily Digest – October 2, 2025

Today’s update spotlights emerging protections and upcoming events for low-wage workers in agriculture, warehousing, and construction. Drawing from state and advocacy sources, we highlight fresh legislative impacts, resources, and guidance to navigate workplace challenges.

Overview of the Regular Rate of Pay Under the Fair Labor Standards Act (FLSA)

December 2019

This fact sheet provides general information regarding the regular rate of pay under the FLSA.

The FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at not less than time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek.  Fact Sheet #22 provides general information about determining hours worked. 

The amount of overtime pay due to an employee is based on the employee’s regular rate of pay and the number of hours worked in a workweek. Earnings may be determined on a piece-rate, salary, commission, or some other basis, but in all such cases the overtime pay due must be computed on the basis of the average hourly rate derived from such earnings. This is calculated by dividing the total pay for employment (except for the statutory exclusions) in any workweek by the total number of hours actually worked to determine the regular rate.  Fact Sheet #23 provides additional information regarding overtime pay.

The regular rate of pay is based upon actual facts and cannot be circumvented by an agreement. The regular rate may not be lower than the FLSA minimum wage or, where applicable, a higher state or local minimum wage.  If the regular rate is higher than the federal FLSA minimum wage, overtime compensation must be calculated using that higher regular rate.  Fact Sheet #23 provides additional information regarding the calculation of overtime pay.

The formula to compute the regular rate is:

Total compensation in the workweek (except for statutory exclusions) ÷ Total hours worked in the workweek = Regular Rate for the workweek

Exclusions from the regular rate

Under the FLSA, the regular rate includes “all remuneration for employment paid to, or on behalf of, the employee.”  The FLSA (29 USC § 207(e)) provides an exhaustive list of types of payments that can be excluded from the regular rate of pay when calculating overtime compensation.  Unless specifically noted, payments that are excludable from the regular rate may not be credited towards overtime compensation due under the FLSA.  Additional information regarding exclusions from the regular rate may be found in the regulations, 29 C.F.R. § 778

.200-.225.  The following types of payments are excludable from the regular rate:

Gifts and payments in the nature of gifts on special occasions

Sums paid as gifts, including payments in the nature of gifts made on holidays or on other special occasions, or as a reward for service may be excluded from the regular rate, provided the amounts of the gifts (or payments) are not measured by or dependent on hours worked, production, or efficiency.  Examples include, but are not limited to, coffee, snacks, coffee cups, t-shirts, raffle prizes, certain sign-on bonuses, and certain longevity bonuses.  

Payments for occasional periods when no work is performed due to vacation, holidays, or illness; reimbursable business expenses; and other similar payments

Payments for Leave:  Employers may exclude from the regular rate certain payments made for occasional periods when no work is performed.  This includes paid vacation, holiday, sick leave, and other paid time off.  It also includes payments for occasional periods when the employer fails to provide sufficient work, such as when machinery breaks down, expected supplies do not arrive, or there is inclement weather.

Similarly, payments for unused paid leave (also known as paid leave buy-backs) or payments when the employee works instead of taking leave or a paid holiday, are not required to be included in the regular rate.  In the case where an employee reports to work on the holiday and is paid for hours worked plus the holiday payment, the holiday payment is excludable from the regular rate, because it is not considered a payment for hours worked.  Pay for unused leave is similarly excludable.  The pay must be approximately equivalent to the employee’s normal earnings for the period of time that is being “bought back.”  Such payment may be made during the same period when the employee forgoes leave or during a subsequent pay period as a lump sum.

Some employers provide paid meal breaks when employees are relieved from their work duties.  Bona fide meal breaks are not hours worked and these payments do not automatically convert the time to hours worked.  The pay for these meal breaks may be excluded from the regular rate, unless an agreement or established practice indicates the parties have treated the time as hours worked, in which case the payments must be included in the regular rate.

Reimbursement for business expenses:  Reimbursement of the actual or reasonably approximate amount of expenses that an employee incurs while furthering the employer’s interests may be excluded from the regular rate.  Examples include, but are not limited to:

  • Business supplies, materials, or tools
  • Cell phone plans
  • Membership dues in a professional organization
  • Credentialing exam fees
  • Travel expenses

Other similar payments that are not compensation for employment: 

“Show-up” or “reporting” pay compensates an employee for when the employee reports to work as scheduled but is sent home early because there is insufficient work or the employee is not needed to complete the shift.  Such payments may be excluded from the regular rate provided they are made on an infrequent and sporadic basis. 

“Call-back” pay is extra compensation paid to an employee for responding to a call from the employer to perform extra work that was unanticipated by the employer.  Such pay is in addition to the compensation for the time actually worked.  Call-back pay may be excluded from the regular rate provided the call-back was not prearranged.  Payments may be considered prearranged if the scheduling issue that necessitated the payment was anticipated and could have been reasonably scheduled in advance. The specific facts of the situation determine whether the employer anticipated the work and could have scheduled the work. 

Some penalties imposed under state and local scheduling laws are similar to “show up” pay or “call-back” pay, and therefore may be excludable from the regular rate. See Fact Sheet #56B for additional information regarding state and local scheduling law penalties.

Additionally, a payment or the cost of a convenience provided to employees is excludable as an “other similar payment” only if there is no connection to hours worked, services rendered, job performance, or other criteria linked to the quality or quantity of the employee’s work.  These conveniences, often referred to as “perks,” include, but are not limited to:

  • On-the-job medical care and on-site treatment from specialists such as chiropractors, massage therapists, personal trainers, physical therapists, counselors, or Employment Assistance Programs
  • Recreational facilities, such as gym access, gym memberships, and fitness classes
  • Wellness programs, such as health risk assessments, vaccination clinics, nutrition and weight loss programs, smoking cessation, and financial counseling, and mental health wellness programs
  • Employee discounts on retail goods or services
  • Parking benefits and spaces
  • Tuition payments, which includes payments for an employee’s or an employee’s family member’s tuition, regardless of whether the payments are made to the employee, an education provider, or a student-loan repayment program
  • Adoption assistance

Discretionary Bonuses

Such bonuses may be excluded from the regular rate only if:

  • Both the fact that the bonus payment is to be made and the amount of the bonus payment are at the sole discretion of the employer at or near the end of the period; and
  • The bonus payment is not made according to any prior contract, agreement, or promise causing an employee to expect such payments regularly. 

The label assigned to the bonus and the reason for the bonus do not conclusively determine whether the bonus is discretionary.  More information regarding discretionary bonuses is available in Fact Sheet #56C.

Profit-sharing plans

Payments made pursuant to a bona fide profit-sharing plan or trust or a bona fide thrift saving plan may be excluded from the regular rate.   

Employer Contributions to Benefit Plans

Employers may exclude from the regular rate contributions irrevocably made by an employer to a trustee or third person as part of a bona fide plan for death, disability, advanced age, retirement, illness, medical expenses, hospitalization, accident, unemployment, legal services, or other events that could cause significant future financial hardship or expense.  

Premium Payments for Non-FLSA Overtime

Extra compensation paid at a “premium rate” for certain hours worked by the employee because such hours are hours worked in excess of eight in a day, in excess of 40 hours in the workweek, or in excess of the employee’s normal working hours or regular working hours, as the case may be, may be excluded from the regular rate of pay.  Such payments may be credited towards overtime compensation due under the FLSA.

Extra compensation paid at a “premium rate” for work on Saturdays, Sundays, holidays, or regular days of rest, or on the sixth or seventh day of the workweek may be excluded if the premium rate is at least equal to one and one-half times the rate established in good faith for like work performed in nonovertime hours on other days.  Such compensation may be creditable toward overtime pay due under the FLSA.

Extra compensation provided by a “premium rate” under an applicable employment contract or collective bargaining agreement for work outside of the hours established in good faith by the contract or agreement as the basic, normal, or regular workday (not exceeding eight hours) or workweek (not exceeding 40 hours) if the premium rate is at least equal to one and one-half times the rate  established in good faith by the contract or agreement for like work performed during such workday or workweek.  Such extra compensation may be creditable toward overtime pay due under the FLSA.

Stock Options

Any value or income derived from employer-provided grants or rights provided through a stock option, stock appreciation right, or bona fide employee stock purchase program meeting certain criteria may be excluded from the regular rate.  See Fact Sheet #56 for more information.

General Principles:

  • All compensation for hours worked, services rendered, or performance must be included in the regular rate.
  • When a payment is a wage supplement, even if not directly related to employee performance or hours worked, it is still compensation for “hours of employment” and must be included in the regular rate.
  • The determination of whether a particular payment, perk, or benefit may be excluded from the regular rate is made on a case-by-case basis applying the requirements set out in the statute to the specific circumstances.
     

Hotel and Motel Establishments Under the Fair Labor Standards Act (FLSA)

Revised January 2020

This fact sheet contains general information on how the FLSA applies to employees of hotels and motels.

Characteristics

The primary function of a hotel or motel is to provide lodging facilities to the general public. In addition, most hotels or motels provide food to guests and many sell alcoholic beverages. These establishments may also earn revenue from other activities such as valet services offering cleaning and laundering of garments for guests, news stands, and renting out rooms for meetings, lectures, trade exhibits, and weddings.

Coverage

The FLSA includes two methods for applying its provisions to employees of hotels or motels. The “enterprise” basis of coverage provides that if the employer’s annual dollar volume of sales or business is $500,000 or more, whether from only a single establishment or from an enterprise with multiple establishments, and the employer has at least two employees engaged in commerce or in the production of goods for commerce or handling such goods, all employees of the enterprise are covered by the FLSA. The FLSA also provides an “individual employee” basis of coverage that applies even if the annual volume of sales or business is less than $500,000. Employees may still be covered if they individually engage in interstate commerce or produce goods for interstate commerce. Interstate commerce includes such activities as transacting business across state lines via interstate telephone calls or the U.S. Mail, ordering or receiving goods from an out-of-state supplier, or handling the accounting or bookkeeping for such activities. It would also include handling credit card transactions that involve the interstate banking and finance systems.

Requirements

Minimum Wage: Covered nonexempt workers must be paid at least the minimum wage of $7.25 per hour effective July 24, 2009. Wages are due on the regular payday for the pay period covered. Deductions from wages for items such as required uniforms are illegal if they reduce the employee’s wages below the minimum wage or cut into any overtime pay. Tips may be included as part of wages for employees who regularly receive more than $30 a month in tips. However, the employer must pay at least $2.13 an hour in direct wages to tipped employees and make sure that the amount of tips actually received by tipped employees is enough to meet the remainder of the minimum wage (or otherwise pay the difference in wages).

Overtime: Overtime must be paid at not less than one and one-half times the employee’s regular rate of pay for each hour worked in excess of 40 a week. A tipped employee’s regular rate for overtime purposes must include the amount of tip credit claimed by the employer, plus the reasonable cost or fair value of any facilities furnished to the employee as allowed by the FLSA (such as the cost of meals), and the cash wages including any commissions and certain bonuses paid by the employer.

Tips: Tipped employees are those who customarily and regularly receive more than $30 a month in tips. If the employer elects to claim a tip credit, the employer must inform employees in advance, advise them of the amount of tip credit to be claimed, and pay them at least the applicable minimum wage when wages and tips are combined. Also, employees must retain all of their tips, except to the extent that they participate in a valid tip pooling or sharing arrangement.

Youth Minimum Wage: Employers may pay a youth minimum wage of not less than $4.25 an hour to employees under 20 years old during the first 90 consecutive calendar days after initial employment by their employer. The law contains certain prohibitions against employers displacing any employee in order to hire someone at the youth minimum wage.

Youth Employment: The FLSA child labor regulations forbid the employment of minors under age 14 in non-agricultural jobs, restrict the hours of work and limit the occupations for 14- and 15-year olds, and forbid the employment of minors under age 18 in hazardous occupations.

Records: The FLSA requires employers to keep records of wages, hours, and other items, as specified in the record keeping regulations, 29 CFR Part 516

.

Exemptions: Section 13(a)(1) of the FLSA exempts bona fide executive, administrative, professional, and outside sales employees from the minimum wage and overtime pay requirements of the FLSA, if they meet certain tests regarding their job duties and responsibilities and are compensated “on a salary basis” at not less than stated amounts. Further information concerning these exemptions can be found in Regulations, 29 CFR Part 541

.

Typical Problems Causing Non-Compliance Include:

  • Employees placed on salary and classified as exempt without regard to the duties performed.
  • Failure to maintain records of, or pay overtime to, non-exempt salaried employees.
  • Failure to record and pay employees for all hours suffered or permitted to be worked.
  • Illegal deductions from pay for items like cash register shortages, uniforms, errors, bad checks, etc.
  • Failure to pay the correct overtime rate to tipped employees, or failure to pay the correct overtime rate that includes all service charges, commissions, bonuses and all other remuneration.
  • For employees paid with the tip credit: Tips not sufficient to make up the difference between the employer’s direct wage obligation and the minimum wage; employees receiving tips only; and sharing a portion of tipped employees’ tips with employees who are not eligible because they do not normally receive tips such as dishwashers, cooks, chefs, and janitors.
  • Paying straight time for hours worked beyond 40 per week instead of required overtime pay, or averaging the number of hours worked over two or more weeks to avoid overtime pay.
  • Failure to pay minimum wage/overtime to temporary help or employee leasing firm workers who are jointly employed by the hotel. Information concerning joint employment can be found in Regulations, 29 CFR Part 791

.

Manufacturing Establishments Under the Fair Labor Standards Act (FLSA)

Revised July 2008

This fact sheet provides general information concerning the application of the FLSA to manufacturers.

Characteristics

Employees who work in manufacturing, processing, and distributing establishments (including wholesale and retail establishments) that produce, handle, or work on goods for interstate or foreign commerce are included in the category of employees engaged in the production of goods for commerce. The minimum wage and overtime pay provisions of the Act apply to employees so engaged in the production of goods for commerce.

Coverage

The FLSA applies to employees of a manufacturing business covered either on an “enterprise” basis or by “individual” employee coverage. If the manufacturing business has at least some employees who are “engaged in commerce” and meet the $500,000 annual dollar volume test, then the business is required to pay all employees in the “enterprise” in compliance with the FLSA without regard to whether they are individually covered.

A business that does not meet the dollar volume test discussed above may still be required to comply with the FLSA for employees covered on an “individual” basis if any of their work in a workweek involves engagement in interstate commerce or the production of goods for interstate commerce. The concept of individual coverage is indeed broad and extends not only to those employees actually performing work in the production of goods to be directly shipped outside the State, but also applies if the goods are sold to a customer who will ship them across State lines or use them as ingredients of goods that will move in interstate commerce. Additionally, employees who handle interstate calls, mail, invoices, or receive packages, etc., are individually covered. Other persons, such as guards, janitors and maintenance employees who perform duties which are closely related and directly essential to such interstate activities are also covered by the FLSA.

It has been the experience of the Wage and Hour Division that virtually all employees of manufacturers are covered by the Act’s provisions.

Requirements

Covered, nonexempt employees must be paid the Federal minimum wage. This minimum rate must be met regardless of whether the employees are paid by time, piece, job, incentive, or any other basis. The cost of tools, uniforms or other similar requirements may not be borne by the employee where such cost would reduce the wages paid in the workweek below the required minimum wage or in any way reduce the wages due for overtime hours.

Youth Minimum Wage: The 1996 Amendments to the FLSA allow employers to pay a youth minimum wage of not less than $4.25 an hour to employees who are under 20 years of age during the first 90 consecutive calendar days after initial employment by their employer. The law contains certain protections for employees that prohibit employers from displacing any employee in order to hire someone at the youth minimum wage.

Unless specifically exempt, all covered employees must receive overtime pay for hours worked in excess of 40 in a workweek at a rate of not less than one and one-half times their regular rates of pay, regardless of the payroll frequency (bi-weekly, semi-monthly etc.). The regular rate of pay is defined as all remuneration (including production bonuses, shift differentials, attendance bonuses) divided by the total hours of work in the workweek.

Typical Problems

  1. Hours Worked: Failure to count and pay for all the hours as work time such as time spent oiling, greasing, cleaning or installing machines at the start or end of the workday; time spent in travel from job site to job site; or time spent at a designated place to receive instructions or to pick up and carry tools to a designated place.
  2. Exemptions: Employees treated as exempt simply because they have impressive titles or are paid on a salary basis.
  3. Minors under the age of 18 employed in restricted occupations, work areas, or improper hours and times of work.
  4. Employees performing work in their private homes in restricted industries without prior certification from Wage and Hour.
  5. Recordkeeping: Failure to make and keep the required records on wages, hours and other items listed in the recordkeeping regulations (29 CFR Part 516
  1. ).

Some Other Pertinent Labor Laws:

  1. The Immigration Reform and Control Act requires employers to complete and maintain I-9 forms to verify the employment eligibility of all individuals hired after November 6, 1986.
  2. The Wage Garnishment Law limits the amount of an individual’s income that may be garnished and prohibits firing an employee whose pay is garnished for a single debt.
  3. The Employee Polygraph Protection Act prohibits most private employers from using any type of lie detector tests either for pre-employment screening or during the course of employment.
  4. The Family and Medical Leave Act requires covered employers to provide up to 12 weeks of unpaid, job protected leave to “eligible” employees for certain family and medical reasons. Where to Obtain Additional Information

Retail Industry Under the Fair Labor Standards Act (FLSA)

Revised May 2020

This fact sheet provides general information concerning the application of the FLSA to employees of the retail industry.

Characteristics

A retail establishment is an establishment 75% of whose annual dollar volume of sales is not for resale and is recognized as retail in the particular industry. The Wage and Hour Division applies the analysis in 29 CFR Part 779

to all establishments when determining whether an establishment qualifies as a retail establishment.

Coverage

Employees of retail establishments may be covered by the Act in either of two ways. Any retail establishment that is part of an enterprise with an annual dollar volume of sales of at least $500,000 (exclusive of excise taxes at the retail level that are separately stated) must abide by the Act’s requirements. Any employee of a retail establishment, regardless of its sales volume, who is engaged in interstate commerce activities is “covered” on an individual basis. Some examples of interstate commerce activities are:

  • Ordering goods from out-of-state;
  • Verifying and processing credit card transactions;
  • Using the mail or telephone for interstate communications;
  • Keeping records of interstate transactions; or
  • Handling, shipping, or receiving goods moving in commerce.

Requirements

Covered, non-exempt retail establishments are required to meet certain standards under the Act relative to wages and employment of minors.

Covered, non-exempt employees are entitled to the Federal minimum wage. Overtime pay at a rate not less than one and one-half times the employee’s regular rate of pay is required after 40 hours are worked in a workweek. Certain retail or service employees paid by commissions may be exempt from overtime pay.

Youth Minimum Wage: The FLSA allows employers to pay a youth minimum wage of not less than $4.25 an hour to employees who are under 20 years old during the first 90 consecutive calendar days after initial employment by their employer. The law contains certain protections for employees that prohibit employers from displacing any employee to hire someone at the youth minimum wage.

The FLSA youth employment regulations prohibit the employment of minors under 14 years old in non-agricultural jobs, restrict the hours of work and limit occupations for 14- and 15-year-olds, and prohibit the employment of workers under 18 years old in hazardous occupations.

The Act requires employers to keep records of wages, hours, and other items, as specified in the recordkeeping regulations. Employers must keep records for employees subject to the minimum wage and overtime provisions as outlined in 29 CFR Part 516

. Records required for exempt employees differ from those for non-exempt workers, for employees working under uncommon pay arrangements, or for employees to whom lodging or other facilities are furnished.

Typical Problems

Hours Worked: Employers must record and pay for all hours worked by employees including any time controlled by the employer, such as time spent “engaged to wait.” Where employees report to work at their scheduled time, the employer must begin counting that as work time. However, if the employer immediately tells the employees that they are not needed, completely relieves them of duty, and gives them a specific report-back time which enables the employees to use the time for their own benefit, this time does not have to be counted as working time. If employees are only told to wait until they are needed, and are not given a specific report-back time that is long enough to use for their own benefit, all of the waiting time is to be counted as hours worked.

Illegal Deductions: Deductions made from employees’ wages for such items as cash or merchandise shortages, required uniforms, and tools of the trade are not legal to the extent that they reduce the wages below the statutory minimum wage or reduce the amount of overtime pay.

Salaried Employees: A salary, by itself, does not exempt employees from the minimum wage or overtime. Whether employees are exempt from minimum wage and overtime depends on their job duties and responsibilities, as well as the salary paid. Often, in retail businesses, salaried employees do not meet all the requirements specified by the regulations to be considered as exempt from overtime pay. The regulations at 29 CFR Part 541 contain a discussion of the requirements for several exemptions under the FLSA (i.e., executive, administrative, and professional employees – including computer professionals, and outside salespersons).

Security Guard/Maintenance Service Industry Under the Fair Labor Standards Act (FLSA)

Revised July 2008

This fact sheet will briefly cover how the FLSA applies to the Security Guard and Maintenance Service Industries.

Characteristics

The security guard service industry includes those firms that provide protection to firms or individuals. Normally, the guard obtains a State license which is portable from firm to firm. The guards cover a post daily and are usually paid on an hourly basis.

The maintenance service industry includes those firms that provide janitorial services in general. Normally, the firm provides the necessary materials to do the cleaning. The employees generally perform work at one or more locations during the work shift.

Coverage

If the security guard or maintenance worker is employed in an establishment that is engaged in commerce or in the production of goods for commerce, such as a warehouse, factory, bank, insurance company, etc, he/she is covered by the FLSA.

If the security guard or maintenance firm has sales or projects sales in excess of $500,000 per year, or is part of other related businesses where there is common ownership, control, or business purpose and the combined sales or projected sales are in excess of $500,000 per year, then the FLSA will apply to all employees of the firm/enterprise.

Requirements

The FLSA requires the payment of the Federal minimum wage and the payment of time and one-half the regular rate of pay for hours worked in excess of 40 in the workweek. The FLSA also requires the firm to make, keep and preserve certain records among which are the hours worked on a daily and weekly basis by non-exempt employees.

There are also certain restrictions in the employment of minors under age 18, such as the number of hours worked per day/week, how late they can work in the day, and the work they may engage in.

Youth Minimum Wage: The 1996 Amendments to the FLSA allow employers to pay a Youth Minimum Wage of not less that $4.25 an hour to employees who are under 20 years of age during the first 90 consecutive calendar days after initial employment by their employer. The law contains certain protections for employees that prohibit employers from displacing any employee in order to hire someone at the Youth Minimum Wage.

Typical Problems

Security Guard Firms: The security guard cannot bear the cost of the uniform, gun, whistle, belt, and other employer/industry required tools if by purchasing them he/she receives less than the applicable minimum wage or such purchasing would cut into any overtime wages earned. This applies whether she\he buys the uniform directly or if it is sold to the employee by the firm.

The cost of dry cleaning the uniform cannot be borne by the employee if in doing so he/she receives less than the minimum wage or the costs would cut into any overtime wages.

Overtime must be calculated on a workweek basis, and the hours cannot be averaged over a two week period.

The hours worked by guards in more than one post in the same week must be counted together for overtime purposes.

Travel time between work sites must be treated as hours worked..

All hours of work must always be recorded; sometimes they are hidden by showing “expense” payments for hours over 40 in a week, which is illegal.

Maintenance Service Firms: Every person who works must receive payment. If a man and wife team, and/or other family members work together, each member of the team must be carried on the payroll and each must receive proper compensation for their hours worked.

Minors under the age of 16 cannot work past 7:00 p.m., except from June 1st through Labor Day, when they may work until 9:00 p.m.

If minors work, they must also receive proper compensation for the hours they work.

Overtime must be paid after 40 hours of work in the workweek to all non-exempt employees regardless of the method of compensation, i.e., hourly, piece rate, task basis, salary, etc.

The hours worked by a janitor who works in more than one establishment must be counted together for overtime purposes.

Professional Offices Under the Fair Labor Standards Act (FLSA)

Revised July 2008

This fact sheet contains information to assist in determining how the Fair Labor Standards Act (FLSA) applies to Professional Offices, e.g., doctors, lawyers, accountants, etc.

Characteristics

Professional offices provide services to their customers, clients, patients which may or may not involve the sale of “goods” or “products”. Many such offices are small, with few employees, and are local in nature. Others may be part of a larger enterprise with more than one office or establishment.

Coverage

The FLSA provides two methods for determining whether provisions of the Act apply to employees of a given employer.

If the annual dollar volume of sales or business done is $500,000 or more, whether from an enterprise made up of only one establishment or one with multiple establishments, all employees of the enterprise are covered by the Act on an “enterprise” basis.

Additionally, the Act also provides an “individual employee” basis of coverage. If the gross sales or volume of business done does not meet the requisite dollar volume of $500,000 annually, employees may still be covered if they individually engage in interstate commerce, the production of goods for interstate commerce, or in an occupation closely related and directly essential to such production. Interstate commerce includes such activities as transacting business via interstate telephone calls or the U. S. Mail (such as handling insurance claims), ordering or receiving goods from an out-of-state supplier, or handling the accounting or bookkeeping for such activities. It would also include the handling of credit card transactions since that involves the interstate banking and finance systems.

Requirements

Employees who are covered by the FLSA are entitled to be paid at least the Federal minimum wage as well as overtime pay at time and one-half the regular rate of pay for all hours worked over 40 in a workweek. (This may not apply to certain executive, administrative, and professional employees including computer professionals and outside sales). The Act also contains youth employment provisions regulating the employment of minors under the age of 18 in covered work, as well as recordkeeping requirements.

Typical Problems

(1) Paying non-exempt employees a salary and not paying time and one-half for hours over 40 a week, (2) not paying employees for all hours they work, e.g., reporting early or working through lunch break or staying late without being paid for such extra time, (3) not paying for the time employees spend performing work at home or not including such hours for overtime purposes.

Some Other Pertinent Labor Laws:

(1) The Immigration Reform and Control Act requires employers to complete and maintain I-9 forms to verify the employment eligibility of all individuals hired after November 6, 1986. (2) The Wage Garnishment Law limits the amount of an individual’s income that may be garnished and prohibits firing of an employee whose pay is garnished for a single debt. (3) The Employee Polygraph Protection Act prohibits most private employers from using any type of lie detector tests either for pre-employment screening or during the course of employment. (4) The Family and Medical Leave Act requires covered employers to provide “eligible” employees up to 12 weeks of unpaid, job-protected leave each year for specific family and medical reasons.

Operating Without Workers’ Compensation Insurance in California

I. The Problem: Operating Without Workers’ Compensation Insurance in California

  • Legal Mandate: California Labor Code Section 3700 unequivocally states that all employers with one or more employees must provide workers’ compensation benefits. This explicitly includes employees hired through staffing agencies. Both the staffing agency and the client company can share responsibility for worker safety and workers’ comp coverage.
  • Tactics to Avoid Coverage:
    • Misclassification: A common tactic, especially for staffing agencies, is to misclassify employees as “independent contractors” to avoid paying workers’ comp premiums, payroll taxes, and other employee benefits. California has been aggressive in cracking down on this.
    • “Underground Economy”: Some businesses simply operate completely off the books, without any insurance.
  • Risks and Consequences of Non-Compliance: California imposes some of the most severe penalties in the nation:
    • Criminal Offense: Failing to have workers’ compensation coverage is a misdemeanor under California Labor Code Section 3700.5.
      • Punishment: Up to one year in county jail, and/or a fine of up to double the amount of the premium that would have been necessary to secure coverage (but not less than $10,000).
      • Subsequent violations lead to even harsher penalties (e.g., up to one year in jail and a fine of triple the premium, but not less than $50,000).
    • Civil Penalties (Fines):
      • Stop Order: The California Division of Labor Standards Enforcement (DLSE) can issue a “stop order,” prohibiting the use of any employee until coverage is obtained. Failure to observe a stop order is a misdemeanor (up to 60 days in jail and/or a $10,000 fine).
      • Stop Order Penalty: A penalty of $1,500 per employee on the payroll at the time the stop order is issued, up to $100,000.
      • Penalty Assessment Order: The greater of (1) twice the amount the employer would have paid in premiums during the uninsured period, OR (2) $1,500 per employee. If an injured worker files a claim, the uninsured employer can be assessed a penalty of $10,000 per employee on the payroll at the time of injury, up to a maximum of $100,000.
    • Personal Liability: If an employee is injured while the employer is uninsured, the employer is personally responsible for all medical bills, lost wages, and disability benefits. This can be financially devastating.
    • Civil Lawsuits: Injured employees can file a civil action against the uninsured employer in addition to filing a workers’ compensation claim. In these civil cases, the employer is presumed negligent and loses common law defenses. The employee may also be entitled to have their attorney’s fees paid by the employer.
    • Uninsured Employers Benefits Trust Fund (UEBTF): This state fund pays benefits to injured workers of illegally uninsured employers. However, the UEBTF then aggressively pursues the uninsured employer for full reimbursement, plus penalties.
    • Business Reputation: Operating without proper insurance can severely damage a business’s reputation and trust among employees and clients.

II. Prosecution and Enforcement in California

California employs multiple agencies and strategies to prosecute uninsured employers, including staffing agencies:

  1. California Department of Insurance (CDI) – Fraud Division:
    • The CDI’s Fraud Division is a key player in investigating workers’ compensation fraud, including “premium fraud” (employers misstating payroll or employee classifications) and “uninsured employer fraud.”
    • They work closely with local district attorneys’ offices across the state to prosecute violators.
    • The CDI maintains a public website listing Workers’ Compensation Fraud Convictions, detailing the name, case number, county, description of offense, and amount defrauded. This is a valuable resource for finding specific prosecution examples. (e.g., you can browse monthly conviction lists from 2020-2024 on their site).
    • Source: Workers’ Compensation Fraud Convictions – California Department of Insurance
  2. Local District Attorneys’ Offices (DA’s):
  3. California Division of Labor Standards Enforcement (DLSE):
  4. Workers’ Compensation Appeals Board (WCAB):
    • If an injured worker files a claim against an uninsured employer, the WCAB hears the case. If an award is made to the worker, the UEBTF pays, and the employer is then pursued for reimbursement and penalties.
    • Recent legislative efforts (like the Senate Bill S847 mentioned in one search result from May 2025) are aimed at strengthening the Director of the DIR’s ability to identify uninsured employers, place liens on their property, and recover funds for the UEBTF.

III. Resolution and Solutions

When a staffing agency or other employer is found operating without workers’ compensation insurance in California, the resolution typically involves:

  1. Securing Immediate Coverage: The business is compelled to obtain workers’ compensation insurance. Stop-work orders remain in effect until this is done.
  2. Payment of Fines and Penalties: Substantial civil penalties and administrative fines are assessed for the period of non-compliance.
  3. Restitution: If an employee was injured, the employer must reimburse the UEBTF for any benefits paid to the injured worker.
  4. Criminal Prosecution: Depending on the severity and intent, individuals responsible within the staffing agency can face misdemeanor charges, potentially leading to jail time. Felony charges are possible for more severe fraud or repeat offenses (e.g., lying to reduce premiums, as mentioned by the Shasta County DA).
  5. Liens and Asset Forfeiture: The state can place liens on the employer’s property (including real estate) to recover unpaid benefits and penalties.
  6. Increased Scrutiny: Staffing agencies, in particular, face ongoing scrutiny due to the shared responsibility for temporary workers and the historical issue of misclassification.

In essence, California’s system is designed to make operating without workers’ compensation insurance extremely costly and legally perilous for any employer, including staffing agencies, with a focus on protecting injured workers and maintaining a fair business environment.

find specific articles of these happenings and prosecutions in california

You’re in luck! California is very active in prosecuting workers’ compensation fraud, including cases where employers (sometimes staffing agencies or companies using their services) operate without proper coverage. The California Department of Insurance (CDI) is a key player and publishes information on convictions.

Here are some specific articles and resources detailing prosecutions in California:

1. Recent Convictions and Press Releases from the California Department of Insurance (CDI):

The CDI has a dedicated section for “Workers’ Compensation Fraud Convictions” where they list recent cases. This is an excellent source for specific examples.

  • San Jose security company owner sentenced in $3.4 million workers’ compensation fraud case (May 19, 2025):
    • Details: Raul Chavez, owner of Tactical Operations Protective Services (a company providing security guard, staffing, and patrol services), was sentenced for a six-year scheme to underreport payroll and avoid paying workers’ compensation premiums. He concealed over $3.4 million in payroll, resulting in $205,565 in unpaid premiums. He pleaded guilty to felony premium fraud, received 180 days in county jail, two years probation, and ordered to pay restitution.
    • Relevance: This is a very recent and highly relevant example, as it directly involves a company that performs “staffing” services.
    • Source: California Department of Insurance Press Release
  • CDI Workers’ Compensation Fraud Convictions Database:
    • The CDI explicitly states they post convictions for violations of various codes, including Labor Code Section 3700.5 (failure to secure payment of compensation). You can browse monthly lists of convictions.
    • How to use it: Go to the CDI’s website and navigate to their “Workers’ Compensation Fraud Convictions” page. From there, you can select specific years and months to see detailed lists of convictions, often including the name of the convicted party, the county, a description of the offense (which often includes operating without coverage or premium fraud), the amount defrauded, and the punishment imposed.
    • Source: Workers’ Compensation Fraud Convictions – California Department of Insurance

2. Local District Attorney (DA) Offices Prosecutions:

California’s county District Attorney offices are on the front lines of prosecuting these cases. Many have dedicated fraud units. While I can’t link to every single case, here are examples of their programs and what they report:

  • Merced County District Attorney: Their website highlights that it is illegal for an employer to operate without workers’ compensation insurance (CA Labor Code Section 3700.5) and outlines the penalties, including up to one year in jail and/or a fine of up to double the premium owed, but not less than $10,000. They also mention that they receive reports from the CA Department of Insurance Fraud Hotline.
  • Shasta County District Attorney: Also has a Workers’ Compensation Insurance Fraud Program and details penalties for both employees and employers, including for “Employer Fraud” (lying to their insurance company about the number of employees, which leads to underpaying premiums or operating uninsured).

3. Precedent-Setting Cases (Employer Liability for Bogus PEOs):

Sometimes, the “staffing agency” itself might be operating illegally, or an employer might contract with a “Professional Employer Organization (PEO)” that is bogus and doesn’t provide legitimate workers’ comp. California courts have addressed this.

  • “Precedent: Employer Held Liable For Bogus PEO” (February 12, 2025):
    • Details: This article from Workers’ Comp Executive discusses a landmark decision where an employer, Garcias Pallets, was held liable for over $1.3 million in penalties for operating without valid workers’ comp coverage, despite having contracted with PEOs whose coverage was “bogus.” This highlights the due diligence required by businesses when using labor contractors or staffing solutions.
    • Relevance: This shows how an employer can be held liable even when they thought they were getting coverage through a third party (like a PEO or staffing agency) that was not legitimate.
    • Source: Precedent: Employer Held Liable For Bogus PEO | Workers’ Comp Executive

4. Large-Scale Fraud Rings (often involving shell companies/labor brokers):

While not always explicitly “staffing agencies,” many large workers’ compensation fraud schemes involve networks of shell companies, labor brokers, or fake businesses designed to avoid premiums or exploit workers.

How to find more specific cases:

  • Directly search the CDI’s “Workers’ Compensation Fraud Convictions” database. It’s the most direct route for official convictions.
  • Search District Attorney websites: Look for press releases from California county DAs, specifically for their “Workers’ Compensation Fraud Unit” or “White Collar Crime” sections.
  • Use more targeted keywords: If you know a specific county, industry (e.g., construction staffing, agricultural labor contractors), or a time frame, add those to your search.

These resources provide concrete examples and demonstrate the rigorous enforcement efforts in California against employers, including those in the staffing industry, who attempt to operate without the legally mandated workers’ compensation insurance. Sources

Workers’ Comp Executive

www.wcexec.com

PEO Caught With No Coverage By WCAB Judge | | Workers’ Comp Executive

“The insurance in place that EO referenced in the Objection dated December 22, 2023 referred to coverage by co-employer and EO affiliated company, Simplify HR, …

California Department of Insurance

www.insurance.ca.gov

Workers’ Compensation Fraud Convictions – California Department of Insurance

Enforcement Overview / Fraud Division Overview / Workers’ Compensation Fraud Convictions.

Yrulegui & Roberts

www.rjylaw.com

What is the Legal Definition of Workers’ Compensation Fraud in California?

Some of the most common examples of workers’ compensation fraud in California include: A False Claim by an Employee: As an example, someone might claim they …

California Department of Insurance – CA.gov

www.insurance.ca.gov

San Jose security company owner sentenced in $3.4 million workers’ compensation fraud case – California Department of Insurance

News: 2025 Press Release. For Release: May 19, 2025. San Jose security company owner sentenced in $3.4 million workers’ compensation fraud case. SAN JOSE, Calif …

Merced County

www.countyofmerced.com

Workers’ Compensation Insurance Fraud | Merced County, CA – Official Website

– District Attorney. – About Us. – Units. – Fraud Unit. – Workers’ Compensation Fraud.

www.wcexec.com

PEO Caught With No Coverage By WCAB Judge | | Workers’ Comp Executive

Operating Without Workers’ Compensation Insurance New York

I. The Problem: Operating Without Workers’ Compensation Insurance

  • Legal Requirement: New York law generally requires all employers with one or more employees to carry workers’ compensation insurance. This specifically includes staffing agencies, as they are considered the employer of the temporary workers they place.
  • Risks of Non-Compliance:
    • Financial Penalties: Substantial fines can be imposed, often $2,000 for every 10-day period without coverage, or up to two times the cost of compensation for the payroll during the period of failure. These can quickly accumulate.
    • Criminal Charges:
      • For businesses with five or fewer employees, failure to secure coverage is a misdemeanor, punishable by fines and potentially jail time.
      • For businesses with more than five employees, it can be a Class E felony, with higher fines and potential incarceration.
      • Repeat offenders can face even more severe penalties, including Class D felonies.
    • Civil Liability: If an employee is injured, the uninsured employer is personally responsible for all medical bills, lost wages, and potential disability benefits, which can be devastating. Injured workers can also sue the employer directly.
    • Stop-Work Orders: The state can issue stop-work orders, shutting down the business until proof of insurance is provided.
    • Personal Liability: Corporate officers can be held personally liable for claims and penalties.
    • Misclassification Fraud: A common tactic used by some staffing agencies to avoid workers’ comp is to misclassify employees as “independent contractors.” New York actively cracks down on this, as it deprives workers of benefits and gives dishonest companies an unfair advantage.

II. Prosecution and Enforcement in New York

New York employs a multi-pronged approach to combat staffing agencies operating without workers’ compensation insurance:

  1. New York State Workers’ Compensation Board (WCB) Investigations:
    • The WCB is the primary agency responsible for enforcing workers’ compensation laws.
    • They conduct investigations, often initiated by inquiries when an employer’s coverage information is missing.
    • If non-compliance is found, they issue penalty notices.
    • Cases investigated by the WCB are often referred to the New York State Office of the Attorney General for prosecution.
  2. Office of the New York State Attorney General (OAG) Prosecutions:
    • The OAG plays a crucial role in prosecuting employers, including staffing agencies, for workers’ compensation fraud and non-compliance.
    • They bring civil and criminal charges, often seeking significant fines and restitution for unpaid wages or benefits.
    • The OAG may work in coordination with district attorneys’ offices across the state.
  3. Task Forces and Coordinated Efforts:
    • New York has established task forces, such as the Wage Theft Task Force (a collaboration between the Department of Labor, the Attorney General, and District Attorneys), which also addresses issues related to workers’ compensation by cracking down on misclassification and wage theft.
    • There have been increased efforts to conduct random audits of companies’ business records and surprise audits to deter non-compliance.
  4. Increased Penalties and Enforcement:
    • New York has significantly increased the penalties for non-compliance over time to act as a stronger deterrent.
    • The state has invested in new technologies and systems to identify businesses that have failed to register or pay into the workers’ compensation system.
  5. Public Awareness and Reporting:
    • The state promotes awareness among workers about their rights, including the right to workers’ compensation.
    • Hotlines and online reporting tools are available for workers to report wage theft or suspected non-compliance.

III. Resolution and Solutions

When non-compliance is identified and prosecuted, the solutions generally involve:

  1. Securing Coverage: The primary goal is to compel the staffing agency to obtain the required workers’ compensation insurance coverage. In some cases, stop-work orders are lifted only after proof of insurance is provided.
  2. Payment of Fines and Penalties: Agencies are assessed substantial civil fines for the period they operated without coverage.
  3. Restitution: If employees were injured while the agency was uninsured, the agency will be held responsible for covering medical expenses and lost wages, either directly or by reimbursing the Uninsured Employers’ Fund if it paid out benefits.
  4. Criminal Convictions: For more severe or repeated violations, criminal convictions can lead to higher fines, probation, and even jail time for responsible individuals.
  5. Debarment: Businesses found in violation may be debarred from bidding on or being awarded public works contracts.
  6. Policy Reforms: The state continually reviews and reforms policies to make it harder for businesses to evade workers’ compensation obligations and to enhance enforcement capabilities.

In essence, New York’s approach to staffing agencies operating without workers’ compensation insurance involves aggressive enforcement through fines, criminal prosecution, civil penalties, and a focus on preventing misclassification, all aimed at protecting workers and ensuring a fair playing field for compliant businesses. Sources