One Way or Another, You Will Pay: $1.7 Million to Restaurant Workers

Posted by: Gail Cecchettini Whaley, Esq. on Wednesday, January 23, 2019 at 12:00:00 am

The California Labor Commissioner’s Office secured $1.7 million in assets from the owners of a Bay Area restaurant chain, Mango Garden, to pay 56 workers who were victims of “wage theft.” The restaurants were located in Fremont, San Jose, and San Mateo.

“Wage theft” generally means California Labor Code violations involving payment of wages to workers, and combatting wage theft is a top priority for the Labor Commissioner’s office.

In late 2015, the Labor Commissioner’s Office launched an investigation as part of a joint-enforcement effort with the Alameda County District Attorney’s Office. Multiple violations were found, including:

• Employees worked 10 or more hours a day while being paid less than the minimum wage
• Employees did not receive the required meal and rest breaks
• Employees were not paid overtime pay or split shift premiums
• The workers were paid in cash with the employer keeping 15 percent, telling the workers the deduction went toward taxes

As a result of the investigation, the Labor Commissioner’s Office issued wage and civil penalty citations totaling more than $1.8 million. Upon appeal, a hearing officer ruled the individual owners and operators of the business were individually and jointly liable because they caused or failed to prevent the violations. The penalty was also raised to over $2.1 million to reflect interest owed.

The money for the workers wasn’t so easy to get—the owners had gotten wind that some workers were going to file wage claims even before the investigation started. The owners fraudulently transferred the restaurant’s ownership and listed different management to avoid liability. The scheme did not work; the Alameda County District Attorney’s Office seized and is liquidating their assets to pay the wage theft victims.

Payments owed to the 56 workers range from $2,603 to $150,523, with an average of $37,246 awarded to each worker.

The Labor Commissioner’s Office conducts on-site inspections to investigate and enforce compliance with California labor laws, including wage and hour laws. Enforcement investigations typically include a payroll audit involving the prior three years of records in order to determine if there were any violations and calculate any wages and penalties owed.

CEA’s HR Directors are here to help you understand and comply with California wage and hour requirements. Have questions about your recordkeeping requirements? Review CEA’s Record Retention Fact Sheet.

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