California Labor Code 558 punishes employers who commit wage and hour violations with civil penalties of $50 for a first violation and $100 for subsequent violations. These civil penalties are in addition to any back wages the employers owe to their aggrieved employees.
The full text of the statute reads as follows:
558. (a) Any employer or other person acting on behalf of an employer who violates, or causes to be violated, a section of this chapter or any provision regulating hours and days of work in any order of the Industrial Welfare Commission shall be subject to a civil penalty as follows:
(1) For any initial violation, fifty dollars ($50) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages.
(2) For each subsequent violation, one hundred dollars ($100) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages.
(3) Wages recovered pursuant to this section shall be paid to the affected employee.(b) If upon inspection or investigation the Labor Commissioner determines that a person had paid or caused to be paid a wage for overtime work in violation of any provision of this chapter, any provision regulating hours and days of work in any order of the Industrial Welfare Commission, or any applicable local overtime law, the Labor Commissioner may issue a citation. The procedures for issuing, contesting, and enforcing judgments for citations or civil penalties issued by the Labor Commissioner for a violation of this chapter shall be the same as those set out in Section 1197.1.
(c) In a jurisdiction where a local entity has the legal authority to issue a citation against an employer for a violation of any applicable local overtime law, the Labor Commissioner, pursuant to a request from the local entity, may issue a citation against an employer for a violation of any applicable local overtime law if the local entity has not cited the employer for the same violation. If the Labor Commissioner issues a citation, the local entity shall not cite the employer for the same violation.
(d) The civil penalties provided for in this section are in addition to any other civil or criminal penalty provided by law.
(e) This section does not change the applicability of local overtime wage laws to any entity.
Legal Analysis
California employers who fail to compensate their employees fully can be issued a citation by the Labor Commissioner. Offending employers must pay a “civil penalty” to the state for each underpaid employee for each pay period the violation occurred. First-time violations carry a $50 penalty, while all subsequent ones carry $100 penalties. This is in addition to the back pay the employers must give their underpaid employees.1
Example: Jan employs 10 people at minimum wage. One workday the 10 employees work nine hours instead of the usual eight hours. Therefore, they are entitled to their regular rate of pay for the first eight hours and then time-and-a-half overtime pay (OT) for the ninth hour. But Jan refuses to give them extra pay for the ninth hour.
Here, Jan owes her employees their unpaid OT wages. In addition, Jan faces a $50 civil penalty for all ten employees – totaling $500 dollars – which is paid to the state.
Note that employers have 15 days to contest a Labor Commissioner citation. The Labor Commissioner cannot issue citations if a local authority has already done so.2 Also note that only employers can be fined under Labor Code 558 – not employers’ corporate managers, officers, or corporate agents.3
There is an alternative way for underpaid employees to collect back pay: They may be able to sue the employer under Labor Code 1194 (unless an arbitration agreement binds them.) In addition, underpaid employees may bring a PAGA action (short for Private Attorney General Act) to force the employer to pay its Labor Code 558 civil penalties. If successful, the employees receive 25% of the penalties (with the remaining 75% going to the state).4
Legal References
- Labor Code 558 – Civil Penalties. Thurman v. Bayshore Transit Management, Inc. (Cal. App. 4th Dist., 2012), 203 Cal. App. 4th 1112, 138 Cal. Rptr. 3d 130.
- Labor Code 1197.1
- Reynolds v. Bement (Cal. App. 2d Dist., 2003), 36 Cal. 4th 1075, 116 P.3d 1162, 32 Cal. Rptr. 3d 483.
- N.A. v. Superior Court of San Diego County, (2019) 8 Cal. 5th 175, 448 P.3d 239, 252 Cal. Rptr. 3d 228. Labor Code 2698 et seq.