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Thelatest installment of California’s “wage theft” campaigntargets the construction industry. On July 9, 2018, Labor Commissioner Julie Su announced citations against TB Penick & Sons, Inc. (Penick), a San Diego general contractor and its subcontractor Champion Construction, Inc. (Champion), a drywall and framing contractor based in Newport Beach.
The latest installment of California’s “wage theft” campaign targets the construction industry. On July 9, 2018, Labor Commissioner Julie Su announced citations against TB Penick & Sons, Inc. (Penick), a San Diego general contractor and its subcontractor Champion Construction, Inc. (Champion), a drywall and framing contractor based in Newport Beach.
Labor Code 218.7, effective January 1, 2018, makes “direct” contractors engaged in construction work liable for their subcontractors’ failure to pay wages. Under Civil Code 8018, a “direct contractor” is one “that has a direct contractual relationship with an owner.” In this newest case, the state held Penick responsible for Champion’s hidden underpayments to 103 employees on a public high school construction project.
Public works projects have special prevailing wage requirements set by the Department of Industrial Relations based on the location and type of work.
The Labor Commissioner’s investigation resulted in total civil wage and penalty assessments of $1,735,784. Via a settlement agreement, Penick agreed to pay $1,187,078 of that amount, allocated to back pay, penalties and apprenticeship training. These companies were fortunate that the Labor Commissioner pursued civil penalties and not criminal prosecution for the violations.
Commissioner Su highlighted the importance of paying prevailing wages on public projects as well as the liability of contractors for the wage sins of its subs: “Prevailing wages create a level playing field for all contractors bidding on public construction projects. This case clearly demonstrates that general contractors who select contractors that don’t play by the rules will pay a heavy price. Under the law, they are responsible for the wage theft of their subcontractors.”
The Carpenters Contractors Cooperation Committee (CCCC) brought this case to the Labor Commissioner’s attention in March 2016.
Contractors that prefer not to support the state’s General Fund with civil penalties, or to cover unpaid wages to subcontractors’ workers, must ensure their subs are bidding enough to pay their workers properly and monitor subs’ ongoing compliance with wage laws.
See also:
For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.
Helena Kobrin
July 12, 2018
Continuing her “Wage Theft is a Crime” crusade against employers who fail to pay workers all compensation in a timely fashion, theLabor Commissioner announcedcitations against Vista Santa Rosa, Inc., a San Bernardino farm labor contractor, and seven of its client employers, who failed to give 1,374 Coachella Valley seasonal workers their final pay on time.
Continuing her “Wage Theft is a Crime” crusade against employers who fail to pay workers all compensation in a timely fashion, the Labor Commissioner announced citations against Vista Santa Rosa, Inc., a San Bernardino farm labor contractor, and seven of its client employers, who failed to give 1,374 Coachella Valley seasonal workers their final pay on time.
The Commissioner is not claiming that the company failed to pay workers what they were owed, only that it paid them too late, consistently by more than 72 hours. Her office thus assessed a total of $646,875 in waiting time penalties for a period of two years.
Under Labor Code 203, an employer is required to pay final wages, including accrued vacation and earned commissions, on the employee’s last day of work if the employer is terminating the employee, and within 72 hours if the employee resigns. Employers who fail to timely provide this final pay are on the hook for continuing pay at the worker’s daily rate until final pay is given to the worker, up to 30 additional days.
In the first year under investigation, the employer had been Jose Luis Gomez, Jr., who incorporated Vista Santa Rosa, Inc. in the second year. The Commissioner’s office found both Mr. Gomez personally and his company were liable for the penalties.
Commissioner Julie Su stated: “Delaying final paychecks is wage theft and in this case, puts significant pressure on seasonal workers to abandon their pay or wait and jeopardize competitive job and lodging openings.” She highlighted that “Bringing attention to this issue during the grape harvest should deter farm labor contractors and growers from this wage theft practice and help ensure their workers are paid on time.”
As in many other instances we have written about, the Labor Commissioner learned about the situation after employees sought help from a non-profit workers’ organization, in this case, California Rural Legal Assistance.
The lesson here is that employers not only need to know what and how to pay their employees, they also must ensure they do so in a timely fashion even at the conclusion of employment.
For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.
Helena Kobrin
July 5, 2018
Businesses must discipline their employees fairly and consistently in accordance with company policy. An employer should keep proper records of poor performance and misconduct in the worker’s personnel file, including text messages, emails, and formal warnings, along with documentation of the employer’s attempt to correct the problem.
Businesses must discipline their employees fairly and consistently in accordance with company policy. An employer should keep proper records of poor performance and misconduct in the worker’s personnel file, including text messages, emails, and formal warnings, along with documentation of the employer’s attempt to correct the problem.
While California law does not require an employer to issue written disciplinary notices, it is usually a good idea to do so. However, as a poorly worded notice can compound the problem, the employer should carefully draft its written warnings with specific facts cogently stated and without real or imagined legal conclusions or vague generalities.
Additionally, to properly document that the employee received the written warning, the disciplinary notice should include section for an employee’s acknowledgment and response. The “acknowledgment” should clearly be for the receipt of the notice only. That section should also afford space for the employee to deny, rebut, comment, or otherwise respond at his/her option, with extra paper provided if he or she wishes.
If the employee refuses to sign acknowledging receipt of the notice, the employer should attempt to find out why rather than declaring the worker further at fault for insubordination.
If all else fails, a witness can and should confirm in writing the date and time the employee received the notice and that the employee refused to sign it.
See also:
For further assistance, please contact one of our attorneys: Tim Bowles, Cindy Bamforth or Helena Kobrin.
Cindy Bamforth
June 29, 2018
The stateLabor Commissioner has assessedCheesecake Factory Restaurants, Inc. and two contractors hired for janitorial services some $4.57 million for underpayment of minimum wage and overtime to 559 janitorial workers at eight Southern California locations. The decision is a significant caution to every business enterprise in the state, responsible since 2015 underLabor Code 2810.3for wage violations committed by contractors and subcontractors performing labor within that company’s “usual course
The state Labor Commissioner has assessed Cheesecake Factory Restaurants, Inc. and two contractors hired for janitorial services some $4.57 million for underpayment of minimum wage and overtime to 559 janitorial workers at eight Southern California locations. The decision is a significant caution to every business enterprise in the state, responsible since 2015 under Labor Code 2810.3 for wage violations committed by contractors and subcontractors performing labor within that company’s “usual course of business” (regular and customary work of a business, performed within or upon the premises or worksite of that business [“client employer”]).
As part of her 2014 “Wage Theft is a Crime” campaign, Labor Commissioner Su stated: “This case illustrates common wage theft practices in the janitorial industry, where businesses have contracted and subcontracted to avoid responsibility for ensuring workers are paid what they are owed.” She continued, “Client businesses can no longer shield themselves from liability for wage theft through multiple layers of contracts. Our enforcement benefits not only the workers who deserve to be paid, but also legitimate janitorial businesses that are underbid by wage thieves.”
According to Commissioner Su’s news release, investigators found janitorial workers labored from around midnight to morning without proper meal or rest break periods. After eight hours, these subcontractor employees were not released until Cheesecake Factory managers reviewed the work, with frequent additional tasks before those workers were released. According to the release, this resulted in as many as ten hours of unpaid overtime per employee each week.
This result underscores the importance for California companies not only to ensure wage compliance for their own workforces but also to make it their business to monitor and confirm such compliance by firms contracted or subcontracted to perform labor within that company’s usual course of business.
It is vital for employers to know their legal obligations for paying their employees, and must also ensure that any workers employed through contracts and subcontracts are not subject to wage theft violations.
For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.
Tim Bowles
June 28, 2018
Most California employers are aware that state and federal law allows eligible employees to take time off forfamily and medical leave,parental leave,pregnancy disability leave,paid sick leave, andjury duty.
Most California employers are aware that state and federal law allows eligible employees to take time off for family and medical leave, parental leave, pregnancy disability leave, paid sick leave, and jury duty.
California employers may not be as familiar with other mandatory leaves of absence, such as:
Alcohol or Drug Rehabilitation Programs. Employers with 25 or more employees must reasonably accommodate any employee with alcohol, marijuana or drug dependencies who wants to participate in a rehabilitation program so long as the leave does not impose undue hardship on the employer.
Civil Air Patrol Leave of Absence. Employers with 16 or more employees must provide up to 10 days of leave per year to their employee volunteer members of the California Civil Air Patrol division of the U.S. Air Force who have worked for the company at least 90 days. A leave for a single mission cannot exceed three days.
Emergency Rescue Personnel Leave. Employers with 50 or more employees must provide up to 14 days per calendar year to an employee who must attend emergency rescue training or fire rescue, etc.
Literacy Education. Employers with 25 or more employees must provide unpaid time off for literacy education programs.
Military Leave. All employers regardless of size must provide eligible employees with military leaves of absence, which are usually unpaid unless otherwise required by applicable law.
Military Spouse Leave. Employers with 25 or more employees must provide up to 10 unpaid days’ leave to any employee who works more than 20 hours per week when that employee’s spouse is on leave from active military deployment.
Paid Organ and Bone Marrow Donor Leave. Employers with 15 or more employees must provide paid leave for organ donation and bone marrow donation whether or not such employees have used up their available paid sick leave. See, Mandatory Paid Leave for Organ and Bone Marrow Donors (January, 2011).
Reserve Peace Officer. All employers regardless of size must provide a temporary leave to eligible employees in order for them to perform emergency duty as a volunteer firefighter, a reserve peace officer or emergency rescue personnel.
School Visits. Employers with 25 or more employees at the same location must provide time off to employees who are parents, grandparents, step parents, foster parents, guardians or persons standing in the place of a parent, to take part in their child’s school-related activities, such as enrolling or reenrolling the child in a school.
School Visits Involving Suspensions. All employers must provide time off to their employees to appear at their child’s school conference to discuss possible suspension.
Victims of Domestic Violence, Sexual Assault, or Stalking. All employers must allow an employee who has been a victim of such crimes to take time off without pay to appear in legal procedures, obtain temporary restraining orders, etc. Employers who have 25 or more employees must also provide additional leave to seek medical attention for injuries, participate in safety activities, etc. See also, Assisting Workers -Victims of Stalking, Sexual Abuse and Other Traumatic Incidents (July, 2017)
Victims of Serious Crimes. All employers must allow an employee victim of a serious crime as described in Labor Code section 230.2 to take time off to attend judicial proceedings related to that crime.
Victims of Specified Offenses. All employers must provide time off to an employee who has been a victim of certain specified offenses as described in Labor Code section 230.5, for example, victims of serious hit-and-run accidents, felony domestic violence, etc.
Voting. All employers shall provide up to two hours of leave to vote when the employee’s work schedule does not allow him or her sufficient time to vote outside of scheduled work hours.
Witness Duty. All employers must provide time off to any employee compelled by court order, subpoena or other lawful means to appear in court as a witness. This time off may be unpaid for not-exempt-from-overtime employees.
Written workplace policy should adequately describe the nature of any leave and when it can be taken (including the use of any paid vacation), along with the employee’s obligation to inform the employer of that leave’s expected length of time and the projected start and end date.
The above leaves of absence are covered in more detail in our template employee handbook. We have carefully worded our policies to comply with applicable laws. Please visit our website for more information.
For further assistance, please contact one of our attorneys: Tim Bowles, Cindy Bamforth or Helena Kobrin.
Cindy Bamforth
June 22, 2018
On June 7, 2018, theCalifornia Labor Commissioner announced citationstotaling $10 million against seven San Francisco bay area restaurants that failed to pay proper wages to a total of 431 workers.
On June 7, 2018, the California Labor Commissioner announced citations totaling $10 million against seven San Francisco bay area restaurants that failed to pay proper wages to a total of 431 workers.
Citations against Kome Japanese Seafood & Buffet in Daly City exceeded $5.16 million for 133 workers. Kome had been paying 69 dishwashers, cooks, and sushi chefs a fixed salary with no overtime even though their hours exceeded 55 per week, resulting in nearly $3 million in penalties and unpaid wages. The Labor Commissioner also awarded over $1.4 million to hosts, servers, and bussers for violations of minimum wage, overtime, and split shift premiums. Although tips legally belong to the worker who receives them, Kome had been deducting tips from the worker’s wages in order to offset its minimum wage obligations.
Additionally, the Labor Commissioner imposed $4.96 million in citations against Burmese Ruby Burmese Cuisine in Palo Alto and Rangoon Ruby Burmese Cuisine restaurants in five northern California cities for similarly underpaying 298 workers.
In announcing these awards, the Labor Commissioner warned: “Taking tips from workers and paying workers by salary to deny them their hard-earned overtime pay is wage theft. Our job is to protect working people’s right to a just day’s pay for a hard day’s work, and to stop employers who embrace wage theft as a business model.”
These cases were initiated after civil rights organizations received complaints from restaurant workers and reported those to the Labor Commissioner. They follow other recent cases with similar origins. See, January 9, 2018 News Release. These awards continue the Labor Commissioner’s vigorous pursuit of companies that engage in wholesale violations of wage and hour laws.
In her press release, the Labor Commissioner stated: “Workers often do not know their rights and fear losing their jobs for complaining about wage theft. We work with community-based organizations that help workers report labor law violations.”
These cases are a warning that all business owners should confirm and comply with their legal obligations for paying employees under state, federal, and local laws. Employers of workers who receive tips from customers should be aware that those monies belong to the employees who receive them and that they are not to be counted against the employer’s wage obligations. See, Labor Code 351.
For further information, please contact one of our attorneys: Tim Bowles, Cindy Bamforth, or Helena Kobrin.
Helena Kobrin
June 22, 2018
California minimum wagecurrently is $11.00 per hour for employers with 26 or more employees and $10.50 for employers that employ 25 or fewer. Annual increases will continue each January 1 until they reach $15.00 per hour in 2022 for larger employers and in 2023 for employers with 25 or fewer employees.
California minimum wage currently is $11.00 per hour for employers with 26 or more employees and $10.50 for employers that employ 25 or fewer. Annual increases will continue each January 1 until they reach $15.00 per hour in 2022 for larger employers and in 2023 for employers with 25 or fewer employees.
Additionally, as below, nine cities and two counties in California will increase their local minimum wage rates and one new ordinance will go into effect this July 1, 2018. See the UC Berkeley Center for Labor Research and Education listing for regular updates.
Also, some cities have enacted separate minimum wage laws for hotels that also change this July 1, 2018. For example, Long Beach has a minimum wage of $14.64 only for hotel workers. Santa Monica’s minimum wage for hotel workers is $16.10. City of Los Angeles’ hotel workers minimum wage is $16.10.
These local ordinances include notice requirements and require employers to post an updated wage notice where employees can read them easily.
See also:
For further assistance, please contact one of our attorneys: Tim Bowles, Cindy Bamforth or Helena Kobrin.
Helena Kobrin
June 15, 2018
Summer is upon us, time for seasonal measures to protect workers from heat illness. California’sOccupational Safety & Health Standards Board (OSHSB) 2015 regulationsset the standards. See,New Heat Illness Prevention Measures Now in Place(May, 2015);Employers Must Chill(April 11, 2017).
Summer is upon us, time for seasonal measures to protect workers from heat illness. California’s Occupational Safety & Health Standards Board (OSHSB) 2015 regulations set the standards. See, New Heat Illness Prevention Measures Now in Place (May, 2015); Employers Must Chill (April 11, 2017).
These rules require free, fresh, and “suitably cool” drinking water, access to shady rest areas when temperature is over 80 degrees F, monitoring of preventative cool-down, additional high-heat (over 95 degrees F) procedures, and training. See, Heat Illness Prevention Amendments Are Likely to Take Effect May 1, 2015 (April, 2015). They also direct supervisors to closely observe new employees while they become acclimated to a hot environment and all employees during a “heat wave,” defined as 80 degrees F or higher.
California’s Division on Occupational Safety and Health (Cal/OSHA) regularly increases enforcement of these preventative measures over the summer months. See, Cal/OSHA Increases Enforcement (June, 2011).
Cal/OSHA’s website contains additional guidance, including information on causes of heat illness with real examples, how to respond to heat illness, and best practices on a company’s required written prevention plan.
A business’s heat illness prevention plan must be in English as well as in the language(s) understood by the majority of the company’s workers. The plan is a part of an employer’s overall Illness and Injury Prevention Plan (IIPP). A company must make the plan available at the worksite(s) to which it applies.
These standards apply to outdoor work only. However, the OSHSB is due to propose a comparable set of regulations for indoor employees by January 1, 2019. Regardless of any specific rules, employers in industries with high-heat indoor environments should regularly review IIPP measures to prevent related illness.
For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.
Helena Kobrin
June 8, 2018
In a rare victory for employers, the U.S. Supreme Court recently ruled that companies may require workers, as a condition of employment, to sign arbitration agreements that waive the right to participate in workplace-related class action claims.Epic System Corp. v. Lewis.
In a rare victory for employers, the U.S. Supreme Court recently ruled that companies may require workers, as a condition of employment, to sign arbitration agreements that waive the right to participate in workplace-related class action claims. Epic System Corp. v. Lewis.
An arbitration agreement is a contract requiring both sides to resolve their disputes through a private neutral decision-maker rather than a judge or jury. Arbitration has many business-related advantages, including a more efficient, time-saving process that does not involve a potentially more subjective jury process.
A class action is a court case in which a judge allows one or several plaintiffs to sue for a larger group of persons with common claims. For example, a single individual may file and pursue a class action alleging she and all other similarly situated employees were improperly paid for overtime or denied their meal and rest breaks.
A class action “waiver” in an arbitration agreement would preclude the employee from participating in a class action claim, instead limiting that worker to an individualized arbitration proceeding to resolve his or her particular employment complaints.
The National Labor Relations Board (NLRB) has contested the validity of employment-related class action waivers, alleging they unlawfully hinder employees from their rights under the National Labor Relations Act (NLRA) “to engage in … concerted activities” for their “mutual aid or protection” (i.e., the right to join together to sue their employer). However, other laws, particularly the Federal Arbitration Act (FAA), and related court decisions have upheld the validity of such waivers.
The U.S. Supreme Court has addressed this discrepancy in its Epic decision, narrowly ruling in favor of such class action waiver provisions. The Court concluded that nothing in the NLRA would prohibit such waivers and that courts must enforce them under the FAA.
There are still a number of unanswered questions for California employers, including whether similar “representative claims” under this state’s Private Attorneys General Act (PAGA) remain exempt from such class actions waivers.
Regardless, the enforceability of an employment-related arbitration agreement – particularly in California – requires terms that satisfy a demanding set of very specific fairness standards. Some employers, particularly those with smaller workforces who are not at risk of class action suits, may choose not to require arbitration agreements for their workers out of cost considerations.
Thus, employers must proceed carefully before implementing or modifying arbitration agreements to existing employees. For further assistance, please contact one of our attorneys Tim Bowles, Cindy Bamforth or Helena Kobrin.
Cindy Bamforth
June 6, 2018