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Counsels' Corner: Pay Employees Properly Now or Pay Them More Later!

Published Thursday, January 31, 2019
by Gail Cecchettini Whaley, Esq.

Business Man Stealing MoneyThe California Labor Commissioner’s Office recently secured over $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.

The term “wage theft” generally means an employer has California Labor Code violations involving payment of wages to workers.

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

• Employees worked 10+ hours a day and paid less than the minimum wage
• Employees did not receive their 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, and 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 of more than $1.8 million. On 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.

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 is here to help you understand and comply with California wage and hour requirements. Have questions about recordkeeping requirements? Review our Record Retention Fact Sheet.

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