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August 24, 2017

Practicing before California government agencies such as the Labor Commissioner (aka Division of Labor Standards Enforcement), employment litigators such as me are witnessing state agencies becoming increasingly aggressive in handling wage disputes.

Take for example the latest violation du jour: “Wage Theft.” If you’ve followed the news recently, you may have seen headlines regaling Labor Commissioner wage theft citations and victories, “California Labor Commissioner’s Office Cites Two California Companies $4.8 Million for Multiple Wage Theft Violations,” “California Labor Commissioner Cites Oakland Construction Company Over $3.5 Million for Wage Theft Violations,” or “Labor Commissioner Recovers $360,000 for Live-In Caregivers.”

What is wage theft? Does it mean employers are stealing? Yes, when an employer intentionally fails to pay employees or deliberately withholds overtime pay. But quite often the answer is no. The term, wage theft, has become a weapon that encompasses various types of wage violations that occur because of the maze of laws employers must navigate without fully understanding them or appreciating the financial consequences of a “simple mistake.” Wage and hour laws are extremely complicated. Without question there are despicable employers who actually steal from their employees. However, the majority of claims I come across in practice are mistakes that employers make because of confusing laws.

Sometimes, local, state and federal agencies that enforce these laws, as well as judges and practicing employment lawyers, disagree on what’s proper and what’s not. Common problems leading to wage claims (aka wage theft) occur when an employer:

  • Misclassifies certain employees as “exempt” and fails to pay overtime;
  • Miscalculates regular hourly rates of pay and overtime rates of pay;
  • Fails to pay double the employee’s regular hourly rate of pay when an employee works more than 12 hours in a day or a 7th day in a row;
  • Denies employees work-free meal and rest breaks;
  • Does not provide employees with an initial statement of wages or a commission paid employee with a written contract;
  • Fails to provide proper pay stubs; and
  • Retaliates against an employee for filing or threatening to file a wage claim.

All of the examples cited above are forms of wage theft. They are not “thefts” in the traditional sense; they typically involve mistakes; that is “simple mistakes” that may cause a small dollar claim to turn into a high-five or six-figure case due to the severe financial consequences that apply under California and federal laws: Penalties, interest, liquidated damages, and attorney’s fees and cost awards can cause the total amount of the wage claim to be three or four times the size of the original claim. Multiply the wage claim by the number of employees affected by the so-called simple mistake and the scope of the case increases significantly.

FOR EMPLOYERS: Navigating employment laws is difficult. The California Labor Commissioner (aka Division of Labor Standards Enforcement), the California Employment Development Department (unemployment claims and/or employment (payroll) taxes), the United States Department of Labor, are emphasizing wage theft and misclassification of employee cases.

FOR EMPLOYEES: Filing claims with the California Labor Commissioner is the quickest and easiest way to obtain a judgment for unpaid wages such as failure to pay correct overtime, double time (when applicable), and vacation and personal time off. The Labor Commissioner also adjudicates retaliation claims by employees against employers who threaten or otherwise attempt to prevent employees from recovering unpaid wages.

Kenneth J. Sargoy, Esq., provides counseling and representation in California and federal courts and state and federal governmental agencies in connection with employment matters. Questions may be directed to Ken at telephone 310-208-1003 or or to his email, [email protected].

NOTE: This employment alert is designed to provide general information. It is not intended to, nor does it, offer solutions to individual problems. Persons having specific questions should contact Mr. Sargoy directly. THE ALERT IS CLASSIFIED AS A NEWSLETTER AND CONSTITUTES ADVERTISING MATERIAL UNDER APPLICABLE RULES OF PROFESSIONAL CONDUCT.