With more than 20 years doing HR management for businesses, I know there are many more that are exposed to these kinds of claims. We routinely find businesses who did not understand or, worse, ignored overtime, meal period, travel time, prevailing wage requirements, and other wage & hour or employment regulations. Those liabilities can mount very rapidly, and with penalties of up to 30 days wages for each employee (that’s days, not just a months’ salary), you can be upside down very quickly.
It would be a mistake to think that California’s budget crisis means it’s easier to evade this liability. The economic recession leads laid off employees to look for income sources and you could be who they pursue.
In addition, we can expect heightened enforcement by OSHA and the EEOC. OSHA’s 2010 budget funded 100 new OSHA inspectors, with the 2011 budget anticipated to hire another 25 and move 35 from compliance assistance to enforcement. The DOL’s wage & hour division is seeking funding for 90 new investigators, and the EEOC also seeking increases to fund enforcement. While these are federal agencies, they influence enforcement at the state level.
Like most things in business an ounce of prevention is worth a pound of cure and that is certainly true here. Audit your processes and make sure that you resolve any violations before the examiner knocks on your door, not after. Wage and hour rules in California are complex and nuanced with many conflicting rules so make sure that you use a highly skilled person for this review. It is much cheaper to find and fix than it is to learn the rules from an employment agency examiner. Saving a few pennies here can be like borrowing money from the IRS, nice concept but a bad business practice – think interest and penalties.