Friday, February 1, 2013

Spending Time with the Labor Commissioner is Not Fun!

Employers should do their best to avoid claims filed with the Labor Commissioner.  The process is time-consuming.  The risks can be substantial.  And the process lacks the indicia of an orderly judicial process. 

I am not criticizing the employees in the agency.  They have always treated me and my clients professionally and with respect.  They are good people trying to do their job. 

It's the process.  Consequences are too severe for such an informal process. 

California implemented "Berman hearings" many years ago.  The thought was that employees, many of whom depend upon their daily wages to pay their bills, should not be held up by an employer who does not fully pay its obligations.  The Berman hearing was instituted to provide employees a quick and relatively easy way to obtain unpaid wages. 

A deputy labor commissioner oversees a Berman hearing.  They are not lawyers, but have received training in the positions taken by the Division of Labor Standards Enforcement ("DLSE") in California wage law. 

The hearings are set on short notice.  The process does not contemplate discovery.  Subpoenas can be obtained from the deputy, but they are regularly ignored by potential witnesses.  And there is no adequate consequence for a witness who disobeys a subpoena. 

The rules of evidence are not followed.  Therefore, just about anything is permitted in way of testimony and documentary evidence.  Often a defendant is limited in the number of witnesses it can produce because the deputy labor commissioner does not want to hear duplicate evidence.  But the deputy will accept affidavits of persons not present. 

The deputy rules within 15 days of the close of the hearing.  A party may appeal the case to Superior Court, but there are strings.  If the employer is appealing, it must post a bond for the amount of the award issued by the deputy.  And of course, if the employer loses on appeal, it not only pays a judgment, but also attorneys' fees. 

No case is too small for a Berman hearing.  I have a client currently defending against a $12 claim.  Why not just pay the employee $12?  The employer would love to be done with this for $12.  But that won't settle the case. The employee wants waiting period penalties because she was not paid the $12 before she left the workplace.  The penalties are one month's worth of wages.  In this case, the penalties sough are $2,040. 

So why won't the deputy just dismiss the case since the employer is willing to pay the $12 and the whole matter seems frivolous?  Because the deputy can't.  The authority to dismiss an action was taken away from the deputies.  In other words, even the smallest of cases that would lead to unfair results, must proceed to the hearing stage, unless the parties decide to settle. 

No case is too large for the Labor Commissioner.  In a hearing I attended this morning, the employees (who banded together to file a claim against an employer) sought $130,000 in wages and penalties.  It is difficult to imagine that the State of California would allow a claim of this magnitude to move forward in a Berman hearing when the consequences can be so severe to the employer.  Think about it -- making the employer face this substantial claim in a proceeding without formal rules of evidence, discovery and other procedural safeguards.  It's wrong.  Just wrong. 

In the case we defended this morning, the employees claimed they were not given meal and rest periods, and worked overtime without pay.  However, when we began investigating the matter, we learned that the employees falsified their time cards.  They took meal periods without clocking out.  They even had their nails and hair done, still on the clock, without the employer knowing what was happening. 

California needs to add some reasonableness to this process.  There should be a way for an employer to avoid a month's worth of wages (nearly $2,000 on a minimum wage worker) on a $12 claim.  And there should be a way for substantial cases involving complex issues, including fraud, to move directly to Superior Court where safeguards exist in the litigation process. 

Unfortunately, we don't have that available.  So, my advice to employers is to understand the process.  Prepare for it -- and for avoiding it.  Understand your obligations and comply. 

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