Overview: Wage and Hour Enforcement and Penalties

It is illegal for an employer and an employee to agree to a wage lower than the minimum wage.1 For more information on minimum wage, please see Minimum Wage.

Failure to pay the minimum wage subjects you to fines and imprisonment, and restitution of the wages to the employee. The Labor Commissioner can assess a civil penalty of $100 for each underpaid employee for each pay period during which you did not pay the minimum wage. For each subsequent intentional failure to pay the minimum wage, the penalty is $250.2

The Labor Commissioner can also issue citations and recover amounts owed by an employer who has paid less than the wages set by contract, even if it was more than minimum wage.

The Labor Commissioner is also authorized to order liquidated damages in an amount equal to the amount of the wages improperly withheld, plus interest. In the past, employees could only obtain these damages through litigation. The Labor Commissioner may issue a citation for a minimum wage violation and recover the civil penalty and wages. The penalty for a citation includes payment for liquidated damages.3 Employers can contest the citation within 15 business days after service of the citation. Employers can potentially avoid liquidated damages if they can show that they were acting in good faith and had reasonable grounds for believing they were following the law.

• Recently, the California Supreme Court issued an opinion clarifying, as part of a good-faith defense, that employers must show that they made a reasonable attempt to determine the requirements of the law governing minimum wages. Proof that an employer was ignorant of the law is insufficient.4

The court didn’t determine exactly how much employers must do when attempting to determine the applicable wage laws, but it did say that what constitutes a reasonable attempt will vary by context. For example, an individual employing a person on a casual, irregular basis may not need to undertake the same kind of effort as an established business with regular employees. Additionally, depending on the nature of the work arrangement, the court noted that a reasonable attempt to determine the legal requirements will not necessarily entail significant expense or effort, and even established businesses with regular employees may be able to satisfy this requirement without consulting legal counsel.

• All California workers are protected by the state Labor Code; employers must comply with wage and hour laws. Even if employees are not legally eligible to work in the United States, you must pay them for any work performed. For more information, see ”California Immigration Protections” in Immigrant Workers and Discrimination/Retaliation Protection.

Unlawfully withholding wages or failing to pay the minimum wage is a misdemeanor under the California Labor Code.

• The intentional theft of wages, benefits or compensation in the amount greater than $950 for one employee or more than $2,350 for two or more employees in a consecutive 12-month period punishable as grand theft under the California Penal Code, which prosecutors may charge as a misdemeanor or felony.5

Any employee receiving less than the applicable minimum wage or the legal overtime compensation is entitled to recover in a civil action the difference between the wages paid and those due, including interest, reasonable attorneys’ fees and costs of suit.6 The employer may also be ordered by the court to refrain from further violations.7

In addition, independent of any other penalties, employers who fail to pay wages according to certain Labor Code sections that govern, for example, weekly and semimonthly payments and payments in certain industries, may be subject to a separate civil penalty. The Labor Commissioner may recover these penalties, which amount to $100 for the initial violation and $200 plus 25 percent of the amount unlawfully withheld for subsequent violations.

Employees may seek enforcement of these civil penalties by bringing a private action to either recover the statutory penalties in a hearing before the Labor Commissioner or bring a civil action under the Private Attorneys General Act. Employees may not do both.8

The Labor Commissioner can, as an alternative to a judgment lien, create a lien on real property to secure the amount due to the Labor Commissioner under any citation, findings, or decision that has become final and may be entered as a judgment.

In addition to the Labor Commissioner, many provisions of the Labor Code may be enforced by “public prosecutors” under a California law.9 Public prosecutors include the Attorney General, a district attorney, a city attorney, a county counsel, or any other city or county prosecutor. Public prosecutor authority is limited to their geographic jurisdiction unless they have statewide authority. The following enforcement discussion will simply reference the Labor Commissioner but know that under the state’s alternative enforcement law, public prosecutors may also bring enforcement measures.

This topic contains the following information:

• Personnel Liable for Wage Enforcement Fines
• Waiting Time Penalty
• Insufficient Paycheck Funds
• Complaints and Appeals to Recover Unpaid Wages
• Time Limits to File an Unpaid Wages Claim
• Private Attorneys General Act (PAGA) Claims
• Protection for Reporting Labor Code Violations
• Discussion of Wages or Working Conditions

Personnel Liable for Wage Enforcement Fines

Waiting Time Penalty

Insufficient Paycheck Funds

Complaints and Appeals to Recover Unpaid Wages

Time Limits to File an Unpaid Wages Claim

Private Attorneys General Act (PAGA) Claims

Local Ordinance Enforcement

Protection for Reporting Labor Code Violations

Discussion of Wages or Working Conditions

1. Lab. Code sec. 223