California adds protection for employers against wage-and-hour claims

California recently raised its minimum wage to $9 per hour. The law went into effect on July 1, 2014 and provides some workers with much-needed help when it comes to daily living expenses and groceries. But not everyone celebrated the new law; some have argued that raising the minimum wage harms employers or that in order to employ people these establishments will have to cut back on employee hours.

One thing that employers cannot do, however, is have employees work off the clock. Forcing employees to work through their lunch break, under report their hours or otherwise falsify their hours worked is illegal. Employers must also provide overtime pay to workers when applicable under the law.

But off-the-clock overtime remains a problem in the state, and not just for workers making the minimum wage.

Employee lawsuits claiming wage-and-hour violations are on the rise as workers become more familiar with state and federal law. In response, some employers have asked employees to sign arbitration agreements stating that they will not participate in any wage-and-hour class action lawsuits. Instead, the employee agrees to arbitrate any wage-and-hour claims individually. This can save employers vast amounts of money but may result in less of a settlement for the employee.

The state's highest court recently weighed in on whether this type of agreement is legal under federal and state law.

Arbitration agreements upheld

On June 23, the California Supreme Court ruled that generally, arbitration agreements prohibiting wage-and-hour class actions are enforceable and legal under the Federal Arbitration Act. The court made a limited exception, however. Under California's Private Attorneys General Act of 2004, employees can receive "civil penalties" for Labor Code violations.

As is typical with California employment law, this ruling is complex and nuanced. For workers, this means that an employer can effectively prohibit an employee from bringing or participating in a wage-and-hour class action lawsuit - for the most part.

Under state law, an employee who files a lawsuit claiming a violation of PAGA is entitled to receive back pay, damages and penalties. A PAGA violation can also result in one side having to pay attorney's fees. And a California employee can still file this type of claim even if he or she signed a waiver agreeing to arbitration.

An employment law attorney can help

How the recent decision will impact wage-and-hour claims in the state is still unclear. For workers who are being forced to work off the clock, however, there are still legal protections in place. Employees who have worked off the clock are still entitled to back pay and overtime, for example.

Employees who believe their employer is violating California Labor Laws should contact the experienced employment law attorneys at Watkins and Letofsky to discuss their rights and potential legal options.