Policy

Compensation and Payroll Policy

1. Policy Statement

At [Company Name], we are committed to providing accurate and timely compensation to all employees in accordance with all applicable federal, state, and local laws. This policy outlines our standards and procedures for wages, payroll, and other forms of compensation, with a specific focus on strict compliance with the California Labor Code and the Wage Orders issued by the Industrial Welfare Commission (IWC).

2. Payday and Pay Periods

• Non-Exempt Employees: Non-exempt employees will be paid at least twice per month on the regularly scheduled paydays. Compensation for work performed between the 1st and 15th of the month will be paid on or before the 26th of that month. Compensation for work performed between the 16th and the end of the month will be paid on or before the 10th of the following month. The company will ensure that all final paychecks are issued in compliance with the strict deadlines outlined in California Labor Code § 201, 202, and 203 to avoid any waiting time penalties.
• Exempt Employees: Exempt employees will be paid at least once per month on a regularly scheduled payday. All salaries will meet or exceed the state's minimum salary requirements for exempt employees.
• Method of Payment: Employees may elect to receive their pay via direct deposit or a physical check.

3. Hours Worked and Timekeeping

All non-exempt employees are required to accurately record all hours worked, including all meal and rest periods. This includes all time an employee is subject to the company's control, whether at the office or while working remotely. This includes time spent on-call if the employee is not free to engage in personal activities. Falsifying time records is a serious offense that can lead to immediate termination. The company is legally obligated to maintain these records for at least four years.

4. Exempt vs. Non-Exempt Classification

All positions are designated as either "exempt" or "non-exempt" under federal and California law. This classification determines eligibility for overtime pay, meal and rest periods, and other labor law protections. It is the company's sole responsibility to properly classify all positions. Employees may not waive their classification status or their right to these protections. An employee's job title does not determine their classification; it is based on their duties, responsibilities, and salary level as defined by the IWC Wage Orders.

5. Overtime Compensation

In accordance with California law (Labor Code § 510), non-exempt employees will be paid overtime as follows, regardless of whether the overtime was pre-authorized:

• Daily Overtime: Time and one-half their regular rate of pay for all hours worked more than eight (8) hours up to and including twelve (12) hours in any workday.
• Daily Double-Time: Double their regular rate of pay for all hours worked more than twelve (12) hours in any workday.
• Seventh Consecutive Day: Time and one-half their regular rate of pay for the first eight (8) hours worked on the seventh consecutive day of work in a single workweek. Double-time will be paid for all hours worked more than eight (8) on the seventh consecutive day.

6. Meal and Rest Periods

Meal and rest periods are a fundamental right under California law, and the company is required to provide a compliant, duty-free period.

• Meal Periods: Non-exempt employees who work more than five (5) hours in a day are entitled to a thirty (30) minute unpaid, duty-free meal period that must begin before the end of the fifth hour of work. The employee must be relieved of all duty during this time. If the total workday is no more than six (6) hours, the employee may agree to waive the meal period in writing. If an employee works more than ten (10) hours, a second thirty (30) minute unpaid meal period is required, which may be waived only if the first meal period was not waived and the total hours worked do not exceed twelve. If a compliant meal period is not provided, the company will pay one hour of premium pay at the employee's regular rate as a penalty.
• Rest Periods: Non-exempt employees are entitled to a paid, ten (10) minute rest period for every four (4) hours worked or major fraction thereof. This rest period must be provided as close to the middle of the work period as possible and is not to be combined with meal periods. If an employee is not provided a rest period, the company will pay one hour of premium pay at the employee's regular rate.

7. Final Paychecks and Vacation Pay

In strict compliance with the California Labor Code, final wages will be paid as follows:

• Voluntary Resignation: If an employee provides at least 72 hours of notice of their resignation, their final paycheck will be issued on their last day of employment. If less than 72 hours of notice is provided, the final paycheck will be issued within 72 hours of their last day.
• Involuntary Termination: For an involuntary termination (e.g., termination, layoff), the final paycheck will be issued immediately on the last day of employment.
• Vacation Pay: Unused, accrued vacation time is considered wages under California law and must be paid out in full on the employee's final paycheck.
• Waiting Time Penalty: Failure to provide a timely final paycheck may subject the company to a waiting time penalty of one day of pay for each day the employee goes unpaid, up to a maximum of 30 days.

8. Deductions from Pay

The company will only make deductions from an employee's paycheck as permitted by California law. These may include federal and state taxes, state disability insurance (SDI), and authorized voluntary deductions (e.g., for health insurance premiums, 401(k) contributions). No deductions may be made for cash shortages, breakages, or company property damage unless the employee has authorized the deduction in a written agreement after the event. The company is prohibited from deducting business expenses from an employee’s wages, such as vehicle mileage, required uniforms (that are not standard "street clothes"), or equipment costs, as these are the responsibility of the employer.

9. Paid Sick Leave (California Healthy Workplaces, Healthy Families Act of 2014)

All employees, including part-time and temporary employees, are eligible to accrue paid sick leave at a rate of at least one hour for every 30 hours worked. An employee may use accrued sick leave for themselves or a family member, as defined broadly under California law. This includes a child, parent, spouse, registered domestic partner, grandparent, grandchild, or sibling. The company must provide a minimum of 24 hours (3 days) of sick leave for use per year.

10. Kin Care

Under California Labor Code § 233, an employee has the right to use up to half of their accrued paid sick leave per year to care for a sick family member. The company may not deny this request or discriminate against an employee for using "kin care" leave.

11. Wage Statements (Labor Code § 226)

Each employee will receive a complete and accurate itemized wage statement with every paycheck as required by Labor Code § 226. This statement will include all legally required information, including:

• Gross wages earned
• Total hours worked
• All deductions
• Net wages earned
• The inclusive dates of the pay period
• The full legal name and address of the legal entity that is the employer
• All applicable hourly rates in effect during the pay period
• The number of hours worked at each rate
• The employee's name and last four digits of their social security number or an employee ID number
• Final wages paid (if applicable)

12. Reporting Discrepancies

If you believe there is an error with your paycheck or have a question about your compensation, you should immediately contact your manager or the HR Department to report the discrepancy.