More Small Businesses Becoming Targets for Lawsuits under California Employment Law

Sacramento, CAThe Sacramento Business Journal reports that an increasing number of small- to medium-sized businesses have been targeted by current and former employees for alleged violations of California state labor laws.

Most of the claims stem from a perceived discrepancy between employee earnings and overtime pay.

Sacramento construction firm Foremost Superior Marble paid several employees bonuses during the year in recognition of their achievements. Three employees later filed suit against the company in a San Jose court, claiming that the added revenue increased their pay rate enough to increase the amount of overtime compensation they should have received.

After 18 months of litigation, the company settled the case to the tune of $400,000, according to the Journal.

Suits like this could severely damage a smaller company, particularly in the current economic climate.

"We got hosed pretty good," Paul Howard, president of Foremost, told the news provider. "We had a cushion for the bad economy, we know it goes up and down, but not for something unforeseen like this."