|
Los
Angeles Daily Journal
Budget Crisis Hits California Wage Claims Process
By H. Ann Liroff
Recently,
the two-step process for handling wage claims in California has been
eviscerated thanks to the state’s budget crisis and cutbacks to the its Division of Labor Standards Enforcement.
Under
the direction of the California Labor Commissioner, the DLSE has long
been designated as the administrative agency to handle employee wage
claims. Those claims can arise from the numerous rules in the California
Labor Code regarding the timing for the payment of earned wages at an
employee’s termination and during the course of employment. In most
complaints reaching the DLSE, employees allege that they were not paid
their termination pay at the time of their departure under Labor Code
Section 201. They may also allege that the termination pay did not
include accrued vacation at the proper rate as per Labor Code Section
227.3. Additionally, employees can allege that they were not paid for
accumulated overtime, as well as for rest or meal breaks in violation of
Labor Code Sections 510 and 512.
Over
the years, the DLSE has developed a fairly consistent two-step process to
handle the basic filing, conference, hearing and appeal procedures for
employee-filed claims. This process is spelled out in the DLSE's Policies
and Procedures for Wage Claim Processing Manual. According to its terms,
if an Informal Conference under Labor Code Section 98.3 is to be held, a
notice of claim is then sent to both parties with a detailed description
of the allegations. Although both parties are required to bring to the
informal conference all documents that they have regarding the claim and
its possible defenses, no testimony is taken under oath. The Deputy Labor
Commissioner, after consulting with both parties and reviewing the
documents, will then generally assess if a claim can be presented
cogently and if the case can be settled. If a settlement is possible, the
Deputy Commissioner will record an agreement at the conference with an
official DLSE agreement form, and provide for a dismissal of the claim at
the time the settlement is paid. In instances where the employer does not
attend the informal conference or where settlement cannot be achieved,
the case is forwarded on to a formal or "Berman" hearing under
Labor Code Section 98(a).
Although
anyone can file a wage claim, the Deputy Commissioner will usually
determine during the informal conference if the division has jurisdiction
over their grievances. The division does not have jurisdiction over [bona
fide] independent contractors or the wage claims of union members who are
part of collective bargaining agreements. The division also has only
limited jurisdiction over public agencies employing federal, state, county
or municipal workers. If the employee is an independent contractor, the
complaint will be dismissed and the employee has an option to file a
private action.
Over
the past few decades, the informal hearing process was created as a
screening device, because as a practical matter the DLSE receives far too
many complaints each year to set each of them for a formal Berman
hearing. This is particularly true in instances when the complainant
cannot accurately document his or her claim or when the claim is outside the
DLSE's jurisdiction. As a result, the informal conferences save the DLSE
time and resources. That’s because the investigative process
undertaken by Deputy Labor Commissioners weeds out many meritless claims
and can help to settle up to 75 percent of the complaints. Settlements at
the informal conference stage frequently occur when the complaint is for
a fairly insignificant sum and the employer is willing to settle in order
to resolve the matter. Only those cases which are hopelessly deadlocked
or those involving multiple complainants were routinely forwarded to a
Hearing Officer for a formal Berman hearing.
During
California's recent fiscal crisis, a number of Deputy Labor Commissioner
positions have been left vacant as a result of attrition and elimination.
So, rather than focusing limited resources and attention on scheduling
informal conferences, the DLSE may be taking a more dramatic approach. In
fact, the DLSE has begun automatically setting all complaints for formal
Berman hearings, citing the lack of resources as justification for its
failure to engage in proper investigations. The formal process is
considerably more expensive for both the employers and the DLSE; and in
many instances, forces hearings on cases that could be either dismissed
or settled at informal conferences.
During
Berman hearings, witnesses are required to testify under oath or by
subpoena. The proceedings are recorded and each party has the right to be
represented by counsel, present evidence, testify and cross-examine the
opposing witnesses. Translators are provided, if needed, by the DLSE.
The
hearing officer has the authority and discretion to conduct the hearing,
explain issues to the parties, set the order of the witnesses and
question parties or witnesses. These proceedings take considerably longer
than the informal conferences and they include subpoenaed documents and
records, as well as sworn witness testimony. Hearing officers can also
award penalties for willful failure to pay the charging party of up to 30
days at the employee's daily rate. Nor is the hearing officer bound by
the formal rules of evidence. Decisions are usually filed within 15 days
of the hearing.
Automatic
referral to formal hearings can present serious challenges for employers,
who must subpoena witnesses and verify documents at considerable cost in
time and expense. Moreover, although both parties can appeal a DLSE
decision, an employee can appeal an adverse ruling to Superior Court for
a [de novo] hearing without posting a bond. Yet, an employer who loses a
Berman hearing must file a cash bond to cover the amount of the claim
before their appeal can be processed. As a result, there is significant
pressure on the employer to present the best case possible at the hearing
to avoid posting a bond at appeal. Further, DLSE may provide the employee
an attorney without charge for an appeal filed by the employer, while
employers must cover their own appellate expenses.
As a
result of this shift in policy at the DLSE, employers are less likely to
get an administrative opportunity to settle their wage claims prior to a
formal administrative hearing. Absent these informal conferences,
employees have little incentive to settle wage claims and face the added
risk of awards for penalty wages. The mere presence of the Deputy
Commissioner at the informal conference serves as an incentive to
employers and employees alike to work towards a compromise settlement.
Without this process, the number of formal hearings and the wait time for
a scheduled date will increase exponentially.
In
the past, informal conferences were scheduled within two to three months
of the filing of claims. And, the DLSE usually allowed no more than three
hours per hearing. In general, that was enough time for the Deputy
Commissioner to assess jurisdiction, the merits of the claim and the
likelihood of settlement. If informal conferences become extinct, then
jurisdiction will have to be determined at the outset of a formal hearing
and there is no real opportunity to engage in mediated negotiations with a
neutral. This will only lengthen Berman hearing proceedings and increase
their expense.
Previously,
Berman hearings were reserved for more complex claims, such as those with
multiple claimants or those that could not be mediated. Now, this is less
likely when the employee has nothing to lose and everything to gain by
taking the longer, more time-consuming route. Unfortunately, these
developments will only make it harder for employers to do business in
California.
This document is intended to
provide you with general information about employment related decisions.
The contents of this document are not intended to provide specific legal
advice. If you have questions about the contents of this update, please
contact Ann Liroff at 415-218-7614 or aliroff@hbblaw.com or contact your
preferred Haight Brown & Bonesteel, LLP attorney. This communication
may be considered advertising in some jurisdictions.
|
