So you received a claim from the Department of Industrial relations. Now what?
Employees in California are protected by the Department of Industrial Relations. If an employee believes they are owed wages, they are able to go onto the Departments website and file a claim online. Once the claim is filed, the Department will send out a notice of Claim and Conference. Essentially this document outlines the employee’s complaint and lists the date of the settlement conference. The first part is the complaint. This is a spreadsheet that shows what the employee is claiming they are owed. The Employer should read the complaint and review their file for any discrepancies. The amounts requested by the employee are based on what they are alleging. There can be one item alleged, or several based on the individual claim. Some examples include:
1. Unpaid wages – This is generally calculated as the number of hours that were worked and not paid, multiplied by the employees rate of pay. This claim can arise in several ways, from an employee being asked to clock out before finishing work, to an employee clocking in early and not being paid.
2. Unpaid Overtime Compensation – In California most hourly employees are entitled to overtime pay if they work over a certain number of hours in a day or week. This claim comes up when an employee worked more than 8 hours in a day or 40 hours in a week, but was paid at their regular rate of pay for the hours that qualified for overtime. The other way it comes up is if a person works 8 hours in a day and is then asked to clock out before finishing their work for the day.
3. Liquidated Damages – In California if a person is not paid for time owed, the employer is liable for liquidated damages in addition to the unpaid wages. The penalty for liquidated damages is equal to the number of unpaid hours multiplied by minimum wage. This essentially doubles the penalty for not paying the employee.
4. Unpaid Meal/Rest Periods – Employees are entitled to a paid rest period of 10 minutes for every major fraction of 4 hours worked. An employee is also entitled to an unpaid meal break of 30 minutes at or before 5 hours of work, and a second at 10 hours of work. There are several other nuisances here, but the general way this complaint arises is by either employers asking their employees to work through lunch, or the employees working through lunch in order to get off earlier. Unless there is a valid waiver on file, employees must take their meal and rest breaks.
5. Waiting Time Periods Penalty – When an employee quits or is fired, they are to receive their final check fairly quickly. If an employee quits, they are required to receive their final check within 3 days of quitting. If they are terminated by the employer, they are to receive their final check the same day. In the event the check is not given within the time period, they are entitled to a penalty equal to a day’s rate for each day up to 30 days.
6. Unpaid Commissions – If an employee was paid commissions on sales and not given everything that was owed, this opens the door to a wage claim, as the commission qualifies as an unpaid wage. This can arise in several situations, from paying a different commission rate than agreed upon to terminating an employee and not paying commissions due.
7. Unpaid reimbursements – An employee is entitled to any costs which are incurred while in a direct discharge of their duties. The easiest example is an employer who requires the employee to drive somewhere in their personal vehicle is required to reimburse the employee for the costs of mileage. If this is not paid, it is a violation of the labor code and sets the employer up for liability.
After reviewing the complaint, the employer has three options. You can write a check made out to the employee for the total amount claimed to the Department of Industrial Relations. This will terminate the complaint, and the Employer does not need to show up for any conferences or hearings. The second option is to ignore the notice of hearing, in which case the next step for the state will be to pick a trial date for the case. The third option is the employer can attend the Settlement Conference. The time and date of this will be located at the top of the Notice of Claim and Conference form. The location is the local Department of Industrial Relations office as noted in the top left corner of the Notice.
The settlement conference is exactly what it sounds like. It is a meeting between the Employee, the Employer, Attorneys for either employer or employee, and the State Settlement Officer (A deputy of the Department of Industrial Relations). The point of the conference is to see if there is a way for the employer and employee to come to an agreement without any further litigation. Sometimes an employee just wants to be heard and will settle for a small amount, and sometimes the claim is the result of the employees misunderstanding of the laws and after the settlement officer explains the misunderstanding the employee will walk away. Other times the employee is just vengeful and since it does not cost anything for the employee, they do not offer to settle and want to proceed to an administrative hearing.
In general, the settlement conference will begin with the settlement officer laying out the ground rules and reading some boilerplate language regarding the process. The officer will then proceed through the compliant, item by item. The settlement officer will read what the claim is, then ask the employee to explain their side. After that the employer is given a chance to respond. The settlement officer will then add some comments giving his thoughts. The process is repeated for each item on of the complaint. At the completion of this process, the settlement officer will give his thoughts on the overall complaint, explain what the next steps are regarding a hearing, and ask the Employee if they are willing to make an offer that they would be willing to accept in order to settle the claim. At that point the Employer is able to either accept the offer, make a counter offer, or reject it entirely and proceed to the hearing. This offer/counter-offer process is not immediate and each side can be given time to think about how they would like to respond. In general, as long as the parties are moving toward settlement, the Department puts the process on hold. Once it becomes clear the parties are not going to settle, the Department sets the trial date for the hearing.
Most cases settle before going to trial. There are several issues with this process in general, including the fact that the Department of Industrial Relations mission statement is as follows,
“The Mission of the California Labor Commissioner’s Office is to ensure a just days’ pay in every workplace in the state and to promote economic justice through robust enforcement of labor laws. By combating wage theft, protecting workers from retaliation, and educating the public, we put earned wages into workers pockets and help level the playing field for law abiding employers.”
The bias of the state towards the employee is implied in its mission statement. There is nothing about helping employers follow the laws which are confusing at best, and impossible at worst. They are not trying to make it easier for employers to comply with the law. Employers in California are required to follow all laws, most of which are not easy to access, nor allow for common sense, and there is no central repository of information the employer can go to for help. OSHA, DIR, DLSE, and more alphabet soup all have their own laws in their own regulations. An easy example is minimum wage. In California, currently an employer is required to pay employees a minimum of $13.00 per hour… unless you are a small business with less than 25 employees, in which case you can pay your employees $12.00 per hour. And if that wasn’t confusing enough, for the next few years that minimum wage will increase every January until it finally reaches $15.00, and the year after that small business will also have to pay $15.00 per hour as well.
While there are several traps the state and disgruntled employees can catch you in, the best recommendation is that you spend some time going through your policies and procedures, through the eyes of an upset employee, and see if you can make the argument for them. If you can, you should probably revise your policies. If you would like someone else to take a look, contact one of our attorney’s that specialize in employment law.