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August 31, 2010
Bank Employees File Wage and Hour Class Action: Tips for Preventing Similar Claims

California employees of Bank of America (BofA), one of the nation’s largest employers, have joined forces with colleagues from across the country to sue the bank for violations of the Fair Labor Standards Act (FLSA) and similar laws in California and other states. The lawsuit is a strong reminder for employers that there’s a lot more to complying with wage and hour laws than just paying nonexempt workers minimum wage and overtime.

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Bank Employees Allege Multiple Violations

The lawsuit alleges that BofA requires nonexempt employees to work during unpaid breaks; doesn’t provide meal and rest breaks; and doesn’t pay terminated employees in a timely way for earned wages and accrued vacation time. How can you avoid similar charges from your employees?

Rest Break Requirements

In California, employers generally must authorize and permit nonexempt employees to take a rest period that is—to the extent practicable—taken in the middle of each work period. The rest period is counted as time worked and must be compensated. The length of the rest is based on the total hours worked daily but should be at least 10 consecutive minutes for each 4-hour work period, or major fraction thereof (anything more than 2 hours is considered a “major fraction” of 4). Because employees are paid for this time, you can require them to remain on the premises, but you must also provide appropriate resting areas during work hours, separate from the toilet rooms.

Employers can stagger the rest periods for workers in certain on-site occupations in the construction, drilling, logging, and mining industries to avoid disruption of work flow and maintain continuous operations. They can also schedule rest periods to coincide with breaks in the flow of work in the course of the workday. And the rest periods for these employees can be skipped in limited circumstances when the disruption of continuous operations would jeopardize the product or process of work—but the employer must make up the missed rest period within the same workday or pay the employee for the missed 10 minutes at the regular rate of pay within the same pay period.

Meal Break Requirements

You must also provide employees with at least a 30-minute meal break when they work more than 5 hours. The meal period is considered “on duty” and compensable at the regular pay rate unless the employee is relieved of all duty and can leave the premises.

On-duty meal periods are allowed only when the nature of the work prevents a worker from being relieved of all duty and when the employer and employee have agreed in writing to an on-the-job meal period. An agreement is not permissible unless the employee would be prevented from being relieved of all duty based on the necessary job duties. Examples include solo workers in a coffee kiosk or all-night convenience store and a security guard stationed alone at a remote site.

Final Payments to Terminated Employees

Under California law, an employee without a written employment contract for a defined period of time who gives at least 72 hours’ prior notice, and quits on the day given in the notice, must be paid all of his or her wages at the time of quitting. When such an employee quits without 72 hours’ prior notice, you must pay him or her all of his wages within 72 hours of quitting. The employee may request that the final wage payment be mailed to a designated address; the date of mailing will be considered the payment date.

Because earned vacation time is considered wages, you  must also pay the employee at his or her final pay rate for all earned, accrued, and unused vacation days in the final paycheck—unless otherwise stipulated by a collective bargaining agreement. Vacation time cannot be forfeited, regardless of the reason for termination.

Practice Tip

Under California law, the required rest period is defined as a “net” 10 minutes, meaning it begins when the employee reaches an area away from the work area and appropriate for rest.

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