Navigating California’s complex labor laws can be challenging for businesses of all sizes, which is why working with a knowledgeable Los Angeles business lawyer is so important. From tech startups near Silicon Beach to family-run restaurants off Ventura Boulevard, employers across the city are held to strict wage and hour standards. Yet even well-intentioned business owners often make compliance errors that result in lawsuits, financial penalties, and lasting damage to their reputation. Understanding the most common employer labor law mistakes—and how to avoid them- is essential to running a legally sound and successful business in Los Angeles.
Misclassifying Employees as Independent Contractors
One of the most frequent California wage law violations involves the misclassification of workers. Some employers wrongly label employees as independent contractors to avoid paying benefits, overtime, or payroll taxes. However, under California’s “ABC Test,” most workers must be classified as employees unless the employer can prove all three prongs of the test are met. Misclassification can lead to back wages, tax penalties, and even class-action lawsuits.
For example, a business near Downtown LA that hires gig workers to make deliveries might believe they’re saving on costs by classifying those individuals as contractors. But if those workers are under direct control and their duties are central to the business model, they likely qualify as employees under California law.
Failing to Pay Overtime Properly
California’s overtime laws are stricter than federal requirements. Employers must pay 1.5 times the regular rate for hours worked beyond eight in a single day or 40 in a week, and double time for hours beyond 12 in a day. A common mistake is assuming overtime only kicks in after 40 hours in a week, ignoring the daily threshold.
This misstep can result in an unpaid overtime claim, especially among employees in industries with long shifts, such as retail workers near The Grove or hospitality staff at hotels around Hollywood Boulevard. Employers must also ensure bonuses and commissions are properly factored into the regular rate of pay when calculating overtime—another area where errors are frequent.
California labor laws require that non-exempt employees receive a 30-minute unpaid meal break for shifts over five hours and a second break if they work more than 10 hours. Employees are also entitled to a 10-minute paid break for every four hours worked.
Failing to provide these breaks or discouraging employees from taking them can result in substantial penalties. Employers must:
- Schedule breaks appropriately: Breaks should fall within specific time frames during shifts.
- Avoid “on-duty” breaks: Workers must be completely relieved of duties unless an on-duty meal break is legally justified and voluntarily agreed to in writing.
Inaccurate or Incomplete Timekeeping
Some employers in LA’s fast-paced business districts, such as Culver City or Burbank, fail to maintain accurate records of hours worked. This often leads to California wage law violations due to underpayment or unpaid time. Time rounding, off-the-clock work, and inaccurate pay stubs are all common issues that can lead to claims.
Employers must ensure they:
- Track all hours worked, including overtime and breaks.
- Provide employees with compliant wage statements.
- Prohibit work off the clock, including tasks performed before or after official shifts.
Misunderstanding Exempt vs. Non-Exempt Status
Classifying employees as exempt (from overtime) without understanding the strict criteria under California law is another major compliance error. To qualify as exempt, an employee must meet both the salary basis test and the duties test, criteria often misunderstood or ignored.
For example, a manager at a Melrose Avenue boutique may be exempt, but only if their primary duties are managerial, they supervise others, and they earn more than a minimum salary threshold. Simply assigning someone a job title like “supervisor” does not automatically exempt them.
Protect Your Business by Seeking Legal Guidance From a Los Angeles Business Lawyer
Avoiding wage and hour mistakes isn’t just about knowing the law; it’s about applying it consistently and correctly across your business. Whether you’re a startup in the Arts District or a well-established brand near Wilshire Boulevard, consulting a qualified legal professional is one of the best ways to avoid compliance errors that lead to lawsuits and fines.
If you’re concerned about California wage law violations or want help avoiding unpaid overtime claims and other employer labor law mistakes, reach out to a trusted Los Angeles business lawyer at Leiva Law Firm. Call (818) 519-4465 today to schedule a consultation and ensure your company stays compliant.
