Employers in California are required to comply with both the state and federal wage and hour laws, including for undocumented workers. A recent decision in Kao v. Joy Holiday, case no. A147540, California Court of Appeal for the First District, demonstrates how an undocumented worker who is waiting for an H-1B visa while working is receiving wages instead of a gift and that the lodging, board and other nonmonetary benefits may not be counted towards the minimum requirements for exempt employees.
Issue: Whether nonmonetary benefits can be treated as part of the salary for an exempt employee and whether an undocumented worker has protections under California and federal minimum wage laws
Ming-Hsiang Kao met the defendant owners of Joy Holiday, a travel company, while he was working in Taiwan. The defendants convinced Kao to come to the United States to work for them in their California office by an agreement. Under his contract, he was to be paid a salary of $2,500. Kao agreed and moved to the U.S., living with the owners in their home. While he waited for his employers to apply for and secure an H-1B visa for him, he worked in their office as an office manager for 11 months. His employers deducted $800 per month from his pay as a rent deduction. After receiving his H-1B visa, his employers then formally hired him to work as an office manager. His contract stated that he was to receive $2,500 per month for 20 hours worth of work and that if he worked more hours, it was his personal choice. His duties required him to work around 50 hours per week, and he normally worked from 9 am to 6 pm Monday through Friday and from 9 am to 2 pm on Saturday. He was later demoted to a non-manager position and was terminated in May 2011. Kao filed suit, alleging that his employers failed to pay him the required minimum wage and that he was not an exempt employee under state or federal law, meaning that he should also have been paid overtime wages.
While the federal minimum wage is $7.25 per hour, the applicable state minimum wage during the time period that Kao worked for Joy Holiday was $8 per hour, meaning that the minimum amount that should have been paid to non-exempt workers was $8 per hour. Exempt employees are those who receive a salary of at least $455 per week and whose duties are administrative in nature. Exempt administrative workers also must have discretion in the performance of their tasks. The federal FLSA protects any worker who is employed by an employer and is very broad, meaning that its minimum wage and overtime standards also apply to undocumented workers.
The defendants argued that Kao was a guest before he received his H-1B visa and thus not subject to the wage and hour laws under either the state labor provisions or the federal law. The court found that the federal law protects undocumented workers and that he was a statutory employee under it, meaning that he should have been paid the minimum state wage of $8 per hour plus overtime for the 11 months he worked as an undocumented worker. The court also found that the state’s law was even broader in its protection of undocumented workers because it defines employees who are entitled to receive minimum wages as anyone who is permitted to work or who an employer allows to work. The court also found that his job did not meet the requirements of an exempt employee after he received his H-1B visa. While the parties agreed that an exempt wage would mean that he would have had to receive $455 per week or $1971.66 under federal law, California’s state laws provide that an exempt employee in California must receive a salary that equals at least twice the minimum wage, which would have equaled $2,773 per month. While the defendants argued that the value of his nonmonetary benefits such as his lodging, board and the use of a company car made his compensation package exceed the state minimum requirement, the court found that non-monetary benefits may not be used to calculate the minimum salaries for exempt workers.
The court ruled that Kao was protected under the state and federal labor laws from the time he first started working for Joy Holiday, including during the time that he was an undocumented worker. It also found that he was entitled to receive at least $8 per hour. Since his salary did not meet the minimum requirements for exempt administrative employees in California, the court found that he was a non-exempt employee for the entire time period that he worked for the defendants. They thus ruled that he was entitled to overtime compensation and additional back pay in an amount that was calculated based on the minimum wage. The court also ruled that his reasonable attorney’s fees and costs should be paid by the defendants.
Contact an attorney
If you believe that you have not received the required compensation for your work, including overtime pay, you may need to get legal help. Calculating the requirements under both state and federal law can be complicated. An experienced Los Angeles employment law attorney might help by analyzing your job duties, hours worked and the amount of pay that you received. If it appears that you have not been fairly compensated for your work, an attorney may litigate the matter on your behalf. Contact an experienced wage and hour attorney today to schedule your consultation and to learn more about your rights.