The California Labor Commissioner’s Office has announced large citations against Young’s Nail Spa in Temecula, for misclassification of 36 workers as independent contractors and for wage theft, paying by the service instead of paying them hourly and overtime in spite of 50-hour weeks. The salon was also faulted for failing to provide appropriate meal and rest breaks. The total $1.2 million citation included:

• $126,702 for minimum wage violations, plus $144,076 in liquidated (automatic) damages for such violations, plus $17,735 interest;
• $118,825 for unpaid overtime;
• $87,155 for missed rest periods;
• $18,103 for meal period violations;
• $65,312 for lack of itemized wage statements; and
• $92,492 for failing to provide proper final paychecks.

The Commissioner also imposed $572,187 in civil penalties, including $160,000 for misclassifying workers as independent contractors, $104,000 for not having proper wage statements; $100,300 for wage violations; and $207,887 for not having workers’ compensation insurance.

The case arose on referral by the Labor and Workforce Development Agency (LWDA) from an initial worker complaint alleging violations under the Private Attorney General’s Act (PAGA). PAGA directs an aggrieved employee to notify the LWDA of an employer’s purported Labor Code violations. If the LWDA chooses not to investigate, that worker may bring a direct legal action for himself or herself as well as for all co-workers similarly affected.

In her announcement, Labor Commissioner Julie Su stated: “Using misclassification as a business model not only denies workers of their rightful pay, but also gives the employer an unfair advantage over law-abiding businesses. California law is clear that if employers pay less than the minimum wage, when they are caught they will be responsible for paying not just the wages owed, but an equivalent amount in liquidated damages plus interest.”

Any small business owner can imagine the devastating effect such a citation would have. To avoid these potential repercussions, employers should regularly review their employment practices to confirm compliance with current federal, state, and local law.

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Helena Kobrin
August 1, 2018

The Labor Commissioner has again looked to the construction industry for its latest round of wage theft citations. A July 24, 2018 release announces that Fullerton Pacific Interiors, Inc. will have to pay over $1.9 million for underpaying several hundred workers over a nearly two-year period.

Affected employees performed taping and drywall installation on hotel, recreation center and casino projects throughout Los Angeles and surrounding counties. The Commissioner found the employer paid the workers a daily rate which did not cover all overtime hours, failed to provide mandated ten minute rest breaks and issued inaccurate itemized wage statements.

Fullerton Pacific must compensate 289 workers $386,685 for unpaid overtime, 472 workers $798,664 for rest period violations and $592,500 for wage statement violations. It also must pay $14,431 in unpaid wages, liquidated damages and waiting time penalties (up to 30 days additional wages for untimely final pay) to those workers who were not paid full minimum wage. The employer is also responsible for $72,400 in civil penalties.

Labor Commissioner Julie A. Su admonished that: “In construction, unscrupulous contractors attempt to obscure their wage theft by paying workers a flat rate rather than for all hours worked. But a daily or other flat rate system does not take the place of minimum wage and overtime obligations.”

The Commissioner’s office was again prompted to investigate after workers complained to a non-profit organization, this time the Carpenters Contractors Cooperation Committee.

Assessments of this magnitude can of course crush a business. It is vital to always pay required minimum wage and overtime to hourly workers, to have proper policy and practice encouraging employees to take their required breaks, and to issue complete and accurate pay stubs in compliance with California law.

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Helena Kobrin
July 26, 2018

On July 10, 2018, Cal/OSHA issued a press release that is a stark reminder of the need for an Illness and Injury Prevention Program (IIPP) both on paper and in practice. Cal/OSHA cited SSA Pacific Inc., a marine cargo handler in San Diego, for safety violations that resulted in the death of a longshoreman at the Port of San Diego after a forklift accident. The citations total a proposed $205,235.

The press release describes what appears to be negligence on the part of the deceased worker in running the forklift into a concrete support column. Cal/OSHA cited the employer because the worker was not wearing a seatbelt and several safety devices on the forklift were disabled. The agency also faulted employer for lack of maintenance, inspection, training and safety checks. The citation also included the unrelated violation of not having an effective heat illness prevention plan. It classified the violations as willful (intentional and knowing) and/or serious (realistic possibility serious harm or death could result).

Fatalities of this nature also often result in wrongful death lawsuits.

While many employers do not have such potentially dangerous equipment in their businesses, California law requires all employers to have an IIPP. As Cal/OSHA did not cite the employer for lack of an IIPP, we can assume the company had one but was not following it. An IIPP must include: assignment of responsibilities to specific staff; a system for effective safety communications; an employee compliance system; accident investigations; correction procedures for non-compliant conditions; training and instruction on safety and health; and documentation/recordkeeping. Having and actually implementing an IIPP protects workers from injury or death, thereby also avoiding expensive repercussions to the employer.

The law allows employers with fewer than 10 employees to address most requirements in a simpler way, with oral instruction “in general safe work practices with specific instructions with respect to hazards unique to the employees' job assignments” and other reduced record-keeping rules.

Cal/OSHA has many tools available to assist businesses, including a guide to creating an IIPP, and sample IIPPs for high hazard employers, non-high hazard employers, intermittent workers, and workplace security. Employers also can seek assistance from an attorney in preparing an IIPP and should have the attorney review any self-drafted IIPPs.

Of course, having an IIPP on paper will accomplish nothing if the business does not implement it. The savings in safe and healthy workers and avoided fines and lawsuits is well worth it.

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Helena Kobrin
July 20, 2018

Defamation refers to the laws that make someone accountable for harming another’s reputation through the spread of falsehoods either verbally (slander) or in writing (libel). Alleged sexual harassers have sued employers and sometimes victims for defamation in connection with statements made in a sexual harassment complaint or investigation.

In response to the #MeToo and #WeSaidEnough movements’ goals of enabling individuals to more freely speak out about harassment allegations, the California legislature recently amended Civil Code section 47 to clarify what types of communications are “protected” (i.e., privileged as a matter of law) from an accused harasser’s defamation claims.

In order to eradicate “the culture of silence that has allowed serial harassers to evade accountability and strike anew,” the amended law, effective January 1, 2019, explicitly protects:

1. any sexual harassment complaint made by an employee to an employer “without malice” (i.e., not motivated by hatred or ill will or not lacking reasonable grounds) based upon credible evidence;
2. any communication between an employer and interested persons without malice regarding a sexual harassment complaint; and
3. a current or former employer’s non-malicious answer to a prospective employer’s inquiry as to whether a decision to not rehire the employee is based upon the employer’s determination that the former employee engaged in sexual harassment.

Although a former employer may lawfully inform a prospective employer in good faith that it would not re-hire an ex-employee due to prior allegations of sexual harassment, it should proceed with caution before doing so. California employers should obtain the assistance of employment counsel to properly determine whether and to what extent to divulge communications about sexual harassment complaints to anyone outside the company, as well as how to document such discussions, and – on the other end – how to address and document any harassment-related information obtained when checking a job applicant’s employment references.

See also:

• Speaking Out Against Sexual Harassment (December, 2017)
• The State of Workplace Harassment And Retaliation Claims (July, 2017)

Cindy Bamforth
July 19, 2018

The California Department of Industrial Relations (DIR) through the California Industrial Welfare Commission (IWC) created and continues to refine 17 wage orders (Wage Orders) to regulate employee pay and working conditions by applicable industry or occupation. For example, Wage Order 4 applies to professional, technical, clerical, and mechanical occupations; Wage Order 9 regulates the transportation industry, and Wage Order 12 addresses the motion picture industry.

After determining which Wage Order(s) apply(ies) to a business, employers must prominently post the most recent version(s) at the workplace, including any job site.

Among other things, the Wage Orders address:

Definitions. Who or what is an employer, employee, wages, workweek, alternative workweeks, commission pay, etc.

Exemptions from Overtime Pay. These include the criteria to qualify a worker for the administrative, executive and/or professional exemptions. See also, California Exemptions from Overtime Pay (January, 2012)

Overtime. How to calculate and when to pay daily, weekly and double time rates. See, The Basics of Overtime (May, 2018).

Alternative Workweek Schedules. California law recognizes a workday exceeding eight hours in a 24 hours period without overtime payments under limited circumstances, also called an alternative workweek schedule. The Wage Orders explain how to implement a state-approved alternative workweek schedule.

Meal and Rest Periods. General rules for when and how to provide employee meal and rest breaks. Several Wage Orders contain exceptions or variations to the general standards for given industries, including those rules permitted in certain industries, such as Construction, Drilling, Logging and Mining (Wage Order 16), Residential Care (Wage Order 15), Health Care (Wage Order 4 and Wage Order 5), Motion Pictures (Wage Order 12), and Broadcast Industry (Wage Order 11). See also, Required meal periods and rest breaks revisited (April, 2018).

Minimum Wage. California’s statewide minimum wage rates will increase annually until reaching $15 per hour in 2022 for larger employers and in 2023 for those with 25 or fewer. See also, California’s Gradual Increases in Minimum Wage, to Reach $15.00 Per Hour by January 1, 2022 (April, 2016). A growing number of cities and counties are requiring even higher rates for employees within their boundaries. See, for example, Mid-Year Changes (June, 2018).

Other Workplace Rules and Conditions: These include, for example, rules and standards for “reporting time pay” (the minimum an employee must receive on a day he/she “reports”/shows up at the workplace but the employer has little or no work to be performed), recordkeeping, cash shortages and breakage, uniforms and equipment, appropriate changing and resting facilities, workplace temperature, and suitable seating.

For further assistance, please contact one of our attorneys Tim Bowles, Cindy Bamforth or Helena Kobrin.

Cindy Bamforth
July 13, 2018

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:

• Contractors Liable for Wages and Benefits if Subcontractors Don’t Pay Their Employees (January, 2018)

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Helena Kobrin
July 12, 2018

The federal Age Discrimination in Employment Act (ADEA) has ensured equal opportunity for older workers (age 40 and over) since its June, 1968 enactment. To commemorate the ADEA’s fiftieth anniversary, the Equal Employment Opportunity Commission (EEOC) published a June, 2018 report examining the current state of age discrimination and older workers in the United States (the Report). Although the Report acknowledged that attitudes towards older workers has improved somewhat over the past 50 years, more must be done to deter age discrimination.

For example, “more than 6 in 10 workers age 45 and older say they have seen or experienced age discrimination in the workplace.” Also, “more than 3 of 4 older workers said their age was an obstacle to find a job.” In the technology industry more than 40 percent of older workers said that their skills are under observation because of their advanced ages and they are afraid they will lose their jobs.

To prevent unlawful age discrimination, the Report recommends:

Age diversity. Prevention of biases starts with recruitment and hiring practices. The Report shows that age diversity improves all employees’ performance and lowers employee turnover in general and employers should focus on attracting and hiring a multigenerational workforce.

Recruitment and hiring strategies. Employment applications must not include the date of birth or other questions that identify the applicant’s age. Interviewers must also be trained to use age-neutral language to avoid unfounded assumptions of older workers (e.g., their presumed “high cost” or “shorter-term” employment).

Retention strategies. The Report concludes that “workers age 50 and older have the highest levels of engagement in the workplace,” which increases employee productivity. The Report also states a workforce with mixed-age and reverse-age mentoring can increase production and overall job satisfaction.

After reviewing this Report, employers should periodically update their practices and policies and train management to ensure compliance with all current federal and state legal standards.

See also:

• Asking for Job Applicant Age is a No- No (August, 2017)
• Job Interviewer Guidelines (June, 2016)
• Age Discrimination in Employment (July, 2012)
• Workplace Age Discrimination Laws Protect “Old People” Only (June, 2011)

July 6, 2018

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.

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:

• Between a Rock and a Hard Place; When It’s Time to Call Your Lawyer (April, 2018)
• Grading Employee Performance (March, 2011)

Cindy Bamforth
June 29, 2018