ZipRealty, a software provider and online real estate brokerage, recently settled a lawsuit with the state of California regarding the company's alleged failure to pay employees minimum wage and overtime. Rather than continuing to fight the lawsuit, which was seeking back wages for affected employees, the company has announced plans to settle for $5 million.

"ZipRealty maintains that the lawsuit was without merit, and we are settling this matter because we believe it is in the best interest of our customers, agents, employees and investors to avoid the cost and risk associated with trial," said Lanny Baker, ZipRealty's president and chief executive officer. Baker explained that instead of devoting more money to fight the case, the firm will put resources into its product and company.

California labor laws are more stringent than those in most other states. Employees earn premium pay - time-and-a-half their standard hourly rates - if they work more than eight hours in a day, 40 hours or six days in a week. If employers do not have a timeclock or another payroll processing system that can track employee attendance and calculate wages, they might run into compliance issues. 

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