The ‘multiplier effect’: How small wage-and-hour violations cost big

For California employers, even minor wage-and-hour violations can wind up costing employers millions of dollars. Blame it on California’s infamous “multiplier effect,” which can come into play in any wage-and-hour case, but which really adds up in class-action suits.

Simply put, the multiplier effect is a small wage-payment violation—involving failure to pay for overtime or off-the-clock work, for example—that triggers a range of California Labor Code penalties that far exceed the value of the original unpaid wage amount.

Just a little unpaid overtime?

Here’s an example of how the multiplier effect works. Let’s say an assistant manager at a retail store has been misclassified as exempt from state overtime pay requirements. The manager is employed for about a year, working approximately two overtime hours each week. For unrelated reasons, the employee then quits her job without notice.

Several months later, the e...(register to read more)