Nonpayment of Minimum Wage in California: Employer Compliance and Risk

Introduction

California business owners must pay employees at least the legal minimum wage for every hour worked. Failing to meet this standard exposes employers to significant penalties, lawsuits, and labor enforcement actions—even if an employee agreed to a lower pay rate or was provided meals or lodging. Labor Code § 1194(a).

Legal Standard: Essential Elements

To prove a nonpayment of minimum wage claim, an employee must show:

• They performed work for the employer.

• They were paid less than the legal minimum wage for some or all hours worked.

• The amount owed, based on the wage rate in effect for the time period.

• Employers cannot pay below the minimum wage, even by private agreement.

Labor Code § 1194; Flowers v. Los Angeles County Metropolitan Transportation Authority, 243 Cal.App.4th 66, 74 (2015).

Scope of Minimum Wage Laws

California’s minimum wage requirements apply broadly, and the legal minimum may change yearly or by locality. Only certain categories, such as outside salespersons, are exempt. Wage orders and state regulations also allow credits for meals and lodging, subject to precise rules. Kao v. Holiday, 12 Cal.App.5th 947, 958 (2017).

Employers must:

• Track and pay all hours worked, regardless of work performed “off the clock” or by agreement.

• Ensure no employee—including executives and salespeople—earns less than the current minimum rate.

Penalties and Remedies

Violations can result in:

• Payment of wage shortfalls.

• Liquidated damages (typically double the unpaid amount).

• Civil penalties.

• Restitution.

Labor Code §§ 1194, 1194.2, 1197.1.

Practical Guidance for California Employers

• Keep updated on state and local minimum wage rates.

• Accurately record all hours worked and pay the correct rate for every pay period.

• Evaluate whether any claimed exemption or credit applies under current law.

• Immediately remedy wage shortfalls or underpayments to minimize exposure.

Bottom Line

California law strictly enforces minimum wage requirements for all covered employees. Business owners must ensure full and timely minimum wage payment or risk significant financial penalties and lawsuits, no matter prior agreements or compensation structure.

Citations

Labor Code §§ 1194(a), 1194.2, 1197.1, 200; Flowers v. Los Angeles County Metro. Transp. Auth., 243 Cal.App.4th 66, 74 (2015); Kao v. Holiday, 12 Cal.App.5th 947, 958 (2017).