Labor Commissioner Imposes Criminal Penalties

Last Updated 11/20/2023

November 20, 2023

Labor Commissioner Imposes Criminal Penalties on California Business Owners for Felony Grand Theft of Labor

After a years-long investigation, the Labor Commissioner’s Office in collaboration with the Los Angeles District Attorney’s Office charged and arrested two Catalina Island business owners on felony charges of grand labor and wage theft, conspiracy to commit grand labor theft, and unemployment insurance fraud.  This probe was initiated as part of the Labor Commissioner’s campaign, “Reaching Every Californian,” which highlights basic protections and connects with affected populations, to make clear that workers and employers understand legal protections and obligations along with enforcement procedures.

The case is a stark reminder that the violation of certain wage and hour laws carries with it potential criminal penalties.  According to the Labor Commissioner, “These employers used sophisticated methods in a fraudulent scheme to pay their workers less than minimum wage, deprive them of essential labor protections and take unfair advantage over businesses that play by the rules.” 

Let’s break down the labor violations and the penalties:

  • Workers, many of whom were immigrants, were paid less than minimum wage, had to clock out to avoid recording overtime.
  • The employer did not accurately record the total number of hours employees worked and did not pay employees for all hours worked.
  • Workers had to record their overtime hours separately on paper so that it was not included in the company’s payroll system.
  • When workers were paid overtime, it was at a reduced rate using aliases rather than their name to hide the overtime hours worked.
  • Employees were required to do preparation work and paperwork off the clock for no pay. 
  • Many of the workers were also tenants of the business owners and would work at multiple locations, finishing a shift at one restaurant and then going to a different one of their  restaurants to work the evening shift. If they left the job, they faced eviction, which deterred employees from confronting the owners.
  • The numbers: The total wages due to at least 18 affected workers is $1,032,684 which covers lost wages from July 2008 to October 15, 2022.  The audit determined that there were minimum wage, overtime and other labor law violations, so that not only was there back pay due, but also associated penalties.  For example, workers paid less than the minimum wage are owed liquidated damages, which is the amount of underpaid wages plus interest.
  • The employers face a maximum of 22 years in prison, if convicted.

The Labor Commissioner’s office reminds employers that any questions on requirements can be directed to [email protected], or contacting the local Cal/OSHA Consultation Office.  Rosasco Law Group, APC is your source for any and all labor and employment issues.  We can help you along your business journey and make sure you are following the law every step of the way. Give us a call today.

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