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Top Ten Mistakes CA Employers Make (That Could Get Them Sued)

Classifying all workers as exempt, whether they are or not 

Although classifying all workers as exempt and paying them a salary would be easier for both the employer and (arguably) the employee, legally it’s not a good idea and can get companies involved in hefty lawsuits. Read more about avoiding exempt/non-exempt wage and hour law issues here.

Letting workers take lunch whenever they want 

Allowing employees to take the required 30 minute unpaid lunch break whenever they want can also put your company in danger of a lawsuit. Employees are required to take a 30-minute unpaid meal period if he/she works more than five hours.

The break must be taken no later the end of the employee’s fifth hour of work. If the employee does not take the meal break within this period, the employer must pay the worker one additional hour of wages.

Make everyone an “independent contractor” because having employees is too much trouble 

Just because you want the worker to be one, or because the worker prefers independent contractor status does not make it so. Ultimately, 46% of Independent Contractors reviewed by the IRS are determined to be misclassified and one in three companies fail a worker classification audit. For more information on independent contractor misclassification, read 1099s and Independent Contractors: What You Need To Know.

Not providing training about harassment and discrimination to managers and supervisors 

By law, employers with 50 or more employees must have their supervisors complete two hours of training about sexual harassment. The training must also be conducted every two years. 

Let workers decide their own schedule without supervision  

Employees cannot decide which days and how many hours a day they prefer to work. Most employees are restricted by law as to how many hours they can work per day without having to be paid overtime. 

Terminating workers who take leave of absences 

Workers have protection under law for reasons such as workers’ comp, disability, pregnancy, medical, military, jury duty, etc. There are laws that provide protection against retribution for workers taking leave. 

Not giving workers their final checks if they fail to return company property 

Not meeting final paycheck deadlines can be costly. If a worker is either terminated or quits more than 72 hours in advance, the worker’s final check has to be ready on their last day. 

Provide loans to workers and deduct the money from their paycheck each pay period 

Under California law, no other deduction other than employee benefits such as health insurance is permitted. 

Use non-compete agreements to protect confidential information by preventing employees from working for the competition.  

Non-compete agreements are prohibited in California with only a few exceptions. An employer cannot keep an employee from working for another company, as the company would be seen as preventing the worker from earning a living. 

Implement a “use it or lose it” vacation policy and avoid paying out all that money at termination  

As the employer, you may place a reasonable limit on the accrual of vacation, but you cannot take away what has already been accrued. 

Here’s a link to the full article from Cal Chamber 

For the latest Contingent Workforce News and Trends, visit

Views: 862

Tags: HR, contingent, recruiting, staffing, temporary, temps, work, workers, workforce

Comment by Chuck Klein on August 14, 2012 at 7:14am


Jill - many of these issues are dictated by state law.  Not everyone in the world lives in California! 

Comment by Todd Lempicke on August 14, 2012 at 8:50am

I'd like to understand the in depth research behind these earth shattering conclusions :)

Comment by Sarah Leverich on August 14, 2012 at 9:37am

When I was the Human Resources Lead for a major retailer the lunch before the 5th hour was a major deal.  We had to give warnings/punishment to people who did not follow that rule. 

Comment by Tiffany Branch on August 14, 2012 at 12:03pm

Ummm, in GA, if someone resigns or is terminated, they can receive their final paycheck on the next pay date. We don't have to have the check on their actual last day of work. That is CA. If the law in GA changed, please let me know. Also, I didn't know "use it or lose it" is illegal. I've worked in NY, NJ, GA for various companies that had use it or lose it policies. Again, is this specific to the weird state of CA?

Comment by Jill on August 14, 2012 at 12:32pm

Wow, I didn't realize this blog would be so widely read! Yes, you're absolutely right, this article pertains mostly to the weird and wacky state of CA and is based on an article by Cal Chamber of Commerce (link included in main article). Of course, each state has its own take on employment law and most are a little more relaxed on most of the points above from what I understand. Hopefully it has provided some food for thought though! 

Comment by Sylvia Dahlby on August 19, 2012 at 4:55pm

I had one thought about 2 of the "mistakes" and point out that the world of work is changing. With the emergence (pun intended) of the more mobile workforce, and home-based employees, the old rules about dictating when to take lunch and working on your own schedule are evaporating. The future of work is not in a cubicle:

Comment by Jill on August 20, 2012 at 2:24pm

Yes, I couldn't agree more Sylvia. Unfortunately, employment law hasn't yet caught up with the modern working world! Hopefully, this will change so that employers and employees will get the flexibility they want, while keeping the interests and rights of both parties protected. Thanks for sharing the article, it's very interesting!


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