By: Philip A. Toomey, Esq.
As we have previously reported, the California Labor Commissioner continues to be very aggressive in issuing citations for the failure of businesses to pay their workers in accordance with California wage and hour law, and assessing personal liability on business owners for violations of law. Today, the Labor Commissioner’s office announced it had cited three restaurants in southern California for $1,065,646. That fine involved only 22 restaurant workers.
The Labor Commissioner launched an investigation at Sanamlung Café in North Hollywood in August 2017. The citation issued today was for nine employees, and in the total amount of $833,707, which included $125,250 in civil penalties. Investigators determined the owners of the restaurant payed their workers a flat rate of $50 for a 10 to 11 ½ hour shift each day, and provided no meal or rest breaks. The individual owners of the restaurant were cited along with the business entity.
The Labor Commissioner also launched an investigation in July 2018 at the Orchid Thai and Orchid Thai Cuisine restaurants after workers reported underpayment of wages. The investigators determined both restaurants paid their workers a flat rate of $45-$50 a day for shifts up to 10 hours, ordered workers to prepare for the day and clean up afterwards off the clock, and did not pay workers split shift premiums as required by California law. The two restaurants, which were under common ownership, were cited $493,739, including $136,550 in civil penalties. The individual owners were also cited together with the business entities.
In the announcement of citations, the Labor Commissioner reminded California employers that when workers are paid less than the minimum wage, they are entitled to liquidated damages that equal the amount of underpaid wages plus interest. Waiting time penalties are also imposed when the employer intentionally fails to pay all wages due at the time of separation. Finally, the Labor Commissioner made clear that workers in California must receive a paid 10 minute rest period for every four hours of work. For workers who do not receive a rest break, they are entitled to an additional one hour of pay at the worker’s regular rate of pay, and civil penalties of $50 per worker per pay period for the initial violation.
While it has been clearly understood for some time that paying a “flat rate” to nonexempt employees in California is not permissible, today’s citations are a stark reminder that the California Labor Commissioner will continue to be aggressive and pursue businesses that are not fully compliant with California’s complex wage and hour laws. And that owners of businesses that violate California’s wage and hour law will be held individually liable.
Leech Tishman’s Employment Practice Group can help clients ensure compliance with California’s complex and technical employment laws and can assist clients with defending against civil or administrative actions.
If you have any questions regarding California’s unique employment laws or these employment law updates, please contact Philip Toomey. Phil serves as Leech Tishman’s West Coast Business & Employment Client Relations Partner and practices in the firm’s Employment, Corporate, Litigation and Real Estate Practice Groups. Phil is based in the Leech Tishman’s El Segundo, CA office. He can be reached at 424.738.4400 or firstname.lastname@example.org.
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Leech Tishman Fuscaldo & Lampl is a full-service law firm dedicated to assisting individuals, businesses, and institutions. Leech Tishman offers legal services in alternative dispute resolution, aviation & aerospace, bankruptcy & creditors’ rights, construction, corporate, employee benefits, employment, energy, environmental, estates & trusts, family law, government relations, immigration, insurance coverage & corporate risk mitigation, intellectual property, internal investigations, international legal matters, litigation, real estate, and taxation. Headquartered in Pittsburgh, PA, Leech Tishman also has offices in El Segundo, CA, Chicago, Los Angeles, New York, Sarasota and Wilmington, DE.