The Labor Commissioner’s Office issued more than $1.2 million in wage theft citations to a nail salon in Temecula, CA for misclassifying and failing to properly pay 36 workers. An investigation found that the workers at Young’s Nail Spa were paid a “per service” fee instead of an hourly rate and not paid overtime despite working up to 50 hours a week. The salon was misclassifying workers as independent contractors instead of employees.
Investigators audited the business records over a 40-month period and determined that 36 workers employed at the salon were paid for each salon service performed instead of the total hours worked. Shifts averaged 9.5 to 10 hours per day but workers were not properly paid for overtime, nor provided proper meal and rest breaks. Young’s Nail Spa also failed to carry valid workers’ compensation insurance coverage for the last three years.
The $1,242,227 citation amount includes $670,040 payable to workers and $572,187 in civil penalties. Of the total due to workers, $126,702 is for minimum wage violations plus $17,375 in interest, $144,076 for liquidated damages, $118,825 for failure to pay overtime, $92,492 for not providing final paychecks as required by law, $87,155 for improperly paid rest periods, $65,312 for not providing proper itemized wage statements, and $18,103 for meal period violations.
The civil penalties include $207,887 for failure to maintain valid workers’ compensation insurance, $160,000 for misclassifying workers as independent contractors, $104,000 for not providing proper wage statements and $100,300 for penalties associated with the wage violations.
Enforcement investigations typically include a payroll audit of the previous three years to determine minimum wage, overtime, and other labor law violations, and any payments owed and penalties due are calculated. Civil penalties collected are transferred to the State’s General Fund as required by law.
The Division of Labor Standards Enforcement, or the Labor Commissioner’s Office, is the division within the Department of Industrial Relations (DIR) with wide-ranging enforcement responsibilities including adjudicating wage claims, inspecting workplaces for wage and hour violations, investigating retaliation complaints and educating the public on labor laws.