Compensation Issues |
April 28, 2017

Five Common Employee Compensation Issues

San Francisco employment lawyers can help executives and employees resolve legal issues concerning compensation

When executives and other employees are not paid the compensation they earned or are entitled to, or are deprived of fair pay due to discrimination, a San Francisco employment lawyer can help. The five situations described below are common compensation issues that arise in California.

Discriminatory Pay

compensation issuesEmployers have discretion when they establish the pay rate for each employee. However, California law prohibits employers from paying some employees less than others because of the employee’s membership in a protected class, including sex.

The California Equal Pay Act prohibits an employer from paying female employees less than their male counterparts for “substantially similar work.” When an employer pays female employees less than their male counterparts for doing similar work, the employer must show that any wage differential is based on one of four statutory defenses. However, the employee’s prior salary may not, by itself, justify any disparity in compensation.

Female employees on average earn about 80% of the wages that male employees earn in the U.S. The Equal Pay Act attempts to remedy that disparity by requiring employers to give equal pay to employees of opposite sexes who perform similar work, as measured by skill, effort, and responsibility.

A San Francisco employment attorney can help executives and other employees understand their rights when they are paid less than other employees because of their sex or membership in any other protected class.

Unpaid Commissions

A commission agreement is a contract between an employer and an employee for work paid on commission. California law requires employers to provide written commission plan agreements to all employees who perform services in California and whose compensation involves commissions. The agreement must explain the method by which the commissions shall be computed and paid. The commission plan must also be signed by the employer and the employer must obtain a signed receipt from each employee.

Disputes arise when employers fail to pay employees commissions they earn under the terms of the commission agreement, or when an employee leaves the employment after the commission is earned but before it is paid. In some cases, employers attempt to improperly withhold money from the employee’s commission, and in doing so unlawfully pass along the costs of the employer doing business to the employee.

A Bay Area employment attorney can help commissioned sales employees recover earned commissions that have not been paid by their employers.

Breach of Contract

Executives and other highly compensated individuals often have contracts that explain the compensation to be paid, such as a base salary, bonuses or other discretionary compensation, benefits, stock options and severance. Sometimes these agreements provide that the employee’s entitlement to compensation or benefits is contingent upon certain events occurring. For example, an employee may be entitled to severance if the employment relationship terminates without cause, or an employee may be entitled to accelerated vesting of stock options upon a change in control.

Disputes arise when employers fail to perform their obligations under these agreements, or when employers mischaracterize the reason for termination to deprive employees of valuable benefits. These are issues that San Francisco employment attorneys often address.

Unpaid Overtime

Employees who work overtime—more than 8 hours worked in a work day or 40 hours in a work week—are sometimes not compensated at the overtime rate. The failure to pay earned overtime occurs for several reasons. Some employers misclassify employees as “exempt” from overtime requirements, even though the employees do not meet the legal standard that makes the exemption applicable. Other employers are indifferent or ignore the overtime laws.

Over a long period, the amount of unpaid overtime owed to the employee can be substantial, especially when added to the penalties that apply in such situations. In those cases, employment lawyers in San Francisco are often asked to help employees recover compensation for the overtime wages they earned but never received.

Late Payment of Final Wages

When the employment relationship ends, some employers delay payment of the employee’s final wages, including any unused paid time off. Under California law, however, employers are required to pay the final wages of employees promptly.

When an employer terminates the employment relationship, the employer is required to pay the employee’s final wages on the last day of employment. When an employee quits, a California employer must pay final wages on the last day of employment if the employee gave notice of the intent to quit at least three days before the final date of employment. Otherwise, the employer has 72 hours to pay the employee’s final wages.

When the employee is owed commissions, a brief delay may be permitted to allow the employer to compute the commissions that the employee earned. However, if commissions are calculable at the time final wages must be paid, the employer should delay paying these wages.

California law allows employees to collect a penalty from the employer when final wages are not paid on time. An employment lawyer in San Francisco can help Bay Area employees collect their final pay and appropriate penalties if final wages are not timely paid.

Getting Help

Executives and other employees who need help with compensation issues in or near San Francisco turn to Minnis & Smallets, the premiere employment law firm in Northern California. We assist these employees in recovering the compensation to which they are legally entitled. To talk with an experienced San Francisco employment lawyer about your compensation issue, call us at 1-415-551-0885 or submit our online contact form.