California wage and hour employment law is a web of statutes, regulations, and Wage Orders – – all clarified by published case law – – that employers need to understand and apply in the everyday workplace to avoid liability. While many of the employer’s obligations are clear (such as to provide overtime pay for work above eight hours per day, to provide or at least offer meal periods, and to keep accurate records of hours worked), many other obligations are not so clear. For example, what is the employer’s duty to know of all work performed, and to make sure that no ‘off-the-clock’ tasks are performed by employees without receiving any pay for such time? What are the required elements to classify an employee as exempt? Despite these uncertainties, the burden remains on the employer to understand and comply with the law.

But what about the employee? Employees should understand the law to help ensure they receive proper compensation and to protect their rights – – BUT DO THEY HAVE AN OBLIGATION to know the law, or to report suspected violations of the law to their employer? With a few very specific exceptions, the answer is ‘no’; there is no authority finding an employee to have any liability for failing to be aware of any aspect of California wage law that may be violated during his or her employment.

The exceptions? If an employee is aware of and is part of a wage law violation, and then purposely hides this, the employer may be relieved of some liability. For example, while an employee must be paid for overtime – – whether or not it is authorized by the employer – – the employer must actually have an opportunity to comply with wage and hour laws. If an employee deliberately fails to report overtime hours worked to his or her employer, and if the employer had no way of knowing about the overtime work, the employer will not be found to have committed an overtime pay violation. In Forrester v. Roth’s I. G. A. Foodliner, Inc. (9th Cir. 1981) 646 F.2d 413, an employee alleged that his employer violated the federal Fair Labor Standards Act (FLSA) for failing to pay the overtime that he never reported. The employee lost his lawsuit. The court determined that “if an employee deliberately omits reporting overtime hours worked to their employer, the employer will not be liable under FLSA for failing to pay overtime.”

If an employee willfully ‘hides’ such overtime work, liability for the wage law violation will only be avoided, however, if the employer had no way of knowing about the work being performed. The very same 9th Circuit Forrester Court, while ruling against the employee, was careful to note that an employer who knows or should have known that an employee is or was working overtime must comply with the law, and that an employer who is armed with this knowledge “cannot stand idly by and allow an employee to perform overtime work without proper compensation, even if the employee does not make a claim for the overtime compensation.” More recent Court decisions agree. The Court in Amaral v. Cintas Corp. No. 2 (2008) 163 Cal.App.4th 1157, 1189 emphasized that “[A]n employer has a statutory duty to maintain proper records of wages, hours and work conditions and is in the best position to know salient facts about the nature and amount of work performed.”. Therefore the employer may avoid liability for wage law violations involving employees who ‘hide the violations’ – – but only if the employer has no way of knowing of the work performed.

Several curiously vague statutes under California wage law appear at first glance to place some duty on the employee. First, Labor Code section 2854 states, “One who, for a good consideration, agrees to serve another, shall perform the service, and shall use ordinary care and diligence therein, so long as he is thus employed.” This statute places a duty of care on the employee when performing job functions. There are, however, no published Court decisions linking the duty set forth in this statute to wage law violations. This statute is most often cited when an employee, who is authorized to carry out functions on behalf of the employer, acts negligently or carelessly and causes harm to the employer. Since employees do not set their wages, but merely accept the terms and conditions of employment set forth by the employer, this statute would not be a basis for an employer’s defense when facing a wage and hour lawsuit.

Then Labor Code Section 2856 reads, “[a]n employee shall substantially comply with all the directions of his employer concerning the service on which he is engaged, except where such obedience is impossible or unlawful, or would impose new and unreasonable burdens upon the employee.” A creative argument may be that an employee has the responsibility to refuse to comply with an employer’s direction if it will subject the employer to wage and hour litigation. Once again, however, there are no published Court decisions holding that this statute serves as a defense for employers in wage and hour litigation, or holding that employees have any specific duty to know of or report violations of California wage law.

In the end, while employees should not purposely ‘hide’ work performed from their employers, the duty to comply with California wage law rests squarely on the employer. The employee has no obligation to know of, or report wage law violations to the employer.