Labor Relations Law Blog

In this article, I will highlight the goals articulated by the Commission and identify proposals in the newly introduced state budget that will affect ways in which the structure of California wage Enforcement is likely to change as a result of the joint work of the Governor, the Legislature and the Commission. Bear in mind that the legislative work on the budget is ongoing, so the precise form of reorganization is pending. I will begin by a timely example of how this new approach is already playing out in practice.

To begin, as we all know much pressure has been brought to bear in the area of gig workers. What is distinctive here, the more direct involvement of the California Labor Commissioner in prosecutions on such issues.

Thus, on March 8 in Los Angeles, the Labor Commissioner’s Office cited Green Messengers Inc. and Amazon.com Services LLC $6.4 million for wage theft violations affecting 718 workers. The Santa Ana-based contractor delivered packages for Amazon.com Services in Los Angeles, Orange and San Bernardino counties.

Quoting from the press release

The Labor Commissioner’s Office opened an investigation in June 2019 after receiving a report of labor law violations indicating Green Messenger workers were experiencing wage theft because they were not paid properly and did not receive correct pay statements. Green Messengers provided delivery services for Amazon.com.

The investigation found that from April 2018 to January 2020, delivery drivers were scheduled to work 10-hour workdays and required to finish an Amazon delivery route in those 10 hours using Green Messenger or Amazon vehicles. Due to the number of deliveries, drivers often had to work through their meal and rest breaks, and were not paid properly for the extra time when they had to work 11 or more hours to complete the route. This resulted in frequent minimum wage, overtime, meal break, rest period and split-shift violations.

“Contracting out services does not release employers from their duty to ensure workers are being legally compensated,” said California Labor Commissioner Lilia García-Brower. “In this case, both Green Messengers and Amazon.com Services are responsible for the wage theft that these workers suffered.”

The citations total $6,454,110, with $5,304,768 owed to the 718 workers. The amount payable to workers includes $3,377,988 in liquidated damages and waiting time penalties, $762,850 in penalty assessments for not providing proper wage statements, $882,735 for split-shift, meal and rest break premiums, and $281,195 for minimum wage, overtime and contract wages.

Green Messengers and Amazon.com Services are responsible for the amounts due to workers according to California’s client-employer liability law, in effect since 2015. The law holds client-employers that obtain labor from a subcontractor liable for their workplace violations.

The citations issued to Green Messengers Inc. include $1,149,342 in civil penalties payable to the state.

The companies have appealed the citations. Under the appeal procedure, the Labor Commissioner’s Office will hold a hearing before a Hearing Officer who will affirm, modify or dismiss the citations.

When workers are paid less than minimum wage, they are entitled to liquidated damages that equal the amount of underpaid minimum wages plus interest. Waiting time penalties are imposed when the employer intentionally fails to pay all wages due to the employee at the time of separation. This penalty is calculated by taking the employee’s daily rate of pay and multiplying it by the number of days the employee was not paid, up to a maximum of 30 days.

The same press release provides the context, noting that

The Labor Commissioner’s Office has launched an interdisciplinary outreach campaign, “Reaching Every Californian.” The campaign amplifies basic protections and builds pathways to impacted populations so that workers and employers understand legal protections, obligations and how to defend them. Californians can follow the Labor Commissioner on Facebook and on Twitter.

The broader context entails an ambitious plan to restructure labor policy through the Govenor’s budget, following the release of the report of a study group intended to set the table for labor law agency reform. The report can be found at California Future of Work Commission Report: A new social compact for work and workers.

The Governor’s Proposed Budget would house several workforce development programs in order to align “fragmented workforce programs.”  

It includes “statutory changes to consolidate the workforce functions dispersed across the Labor and Workforce Development Agency.” The new department would be composed of the California Workforce Development Board, the Employment Training Panel, the Workforce Services Branch and Labor Market Information Division (currently part of the Employment Development Department), and the Division of Apprenticeship Standards (currently part of the Department of Industrial Relations). The budget allocates $2.4 million in one-time General Fund to establish executive staff for the new department.

In addition to these proposals, the budget allocates additional funds to several departments to enforce compliance with Assembly Bill 5 (Gonzalez, Chapter 296 of 2019). This bill codified in state law a recent California Supreme Court decision, Dynamex Operations West, Inc. v. Superior Court of Los Angeles County, that requires companies to classify more workers as employees rather as than independent contractors including providing $17.5 million to the Department of Industrial Relations, $3.4 million to the Employment Development Department, and $780,000 to the Department of Justice.  

These are the key finding made by the Commission on which these changes are based; 

1. Address the unequal distribution of wages, income, and wealth. Inequality is worsened by the growth of low-wage jobs, decline of middle-wage jobs, and wage stagnation experienced by a large share of workers, particularly when there are limited pathways to move from low-wage to higher-wage work. Thirty-one percent of California workers make less than $15 per hour.
2. Tackle workforce inequalities across race, gender, and vulnerable populations. Vulnerable populations face wage gaps, employment gaps, exclusion from the workforce, and disproportionate employment in low- quality jobs. These workers face inequalities across race, gender, age, education level, sexual orientation, disability status, military service history, housing status, citizenship status, and criminal record. Working people of color are over three times more likely than white workers to live in poverty.
3. Tackle workforce inequalities across California’s regions. A growing divide in economic advancement between coastal and inland counties, and between rural and urban communities, leads to inequality in income and employment between geographic regions in California. Just five large California counties make up more than two-thirds of California’s economy in terms of economic output and employment.
4. Ensure that more workers have quality jobs. Quality jobs provide a living wage, stable and predictable pay, control over scheduling, access to benefits, a safe and dignified work environment, and opportunities for training and career advancement. Fewer than half of California workers report being in a quality job.
5. Empower worker voice and organization. Declining worker power and  organization has  been a significant contributor to inequality, declining job quality, and violation of workers’ rights. The share of California workers that are members of unions declined from 24 percent in 1980 to 15 percent in 2018. While the probability of low-wage employment is reduced by 33 percent if a worker has a college degree, it is reduced by 39 percent if a worker is a member of a union.
6. Address work-adjacent issues that create barriers to employment and job quality. Rising costs of housing, transportation, childcare and early childhood education, health care, and other living essentials place a substantial burden on low-wage and middle-wage workers. More than half of renter households in the state are housing cost-burdened, paying more than 30 percent of their incomes toward housing.
7. Strengthen the social safety net for today and the future. The social safety net needs to be broadened to provide real security and to adapt to new realities of the labor market, including increased income volatility, various types of employment relationships, and more contingent work, and adjust for demands of an aging workforce, growing numbers of working parents, greater need for care, and the ongoing possibility of significant workforce disruptions.
8. Support workers in transition. Technological change, public health crises, climate change, and other labor market impacts will require many workers to change occupations, build new skills, match to new jobs, relocate, and adapt to evolving workplace requirements for health and safety.
9. Safely enable technology and protect workers in a data-driven future. As new technologies are adopted in the workplace, workers will require adequate transparency and protection for collection of data in the workplace, benefits from the data they generate, and mitigation of algorithmic bias in areas like hiring and worker assessment.
10. Build skills to prepare for jobs of the future. Workers should be empowered with the skills to meet future needs in the labor market, including greater demand for critical thinking, collaboration, and creativity, in sectors from care work to climate mitigation to digital technology and beyond.
11. Make the most of California’s position as a global leader to make California the place where workers thrive. California possesses a diverse set of assets: world-class innovation, the diversity of its people, strength in agricultural production, world-class university systems, technology innovation in Silicon Valley, and a history of leadership and strong protection for workers. These assets should be leveraged to make the Golden State work for everyone.
12. Support and value essential workers. The pandemic and 2020 wildfires have  highlighted the occupations that are essential to society, and also revealed that society’s essential workers tend to be undervalued and under-protected despite their importance. Essential and front-line workers face both economic vulnerabilities and health and safety risks, and are disproportionately female and workers of color.
13. Support workers disproportionately impacted by external shocks (e.g., COVID-19). COVID-19 highlighted the particular plight of workers (mostly low-income) who work in sectors and occupations where they must  be physically  present to work—the work cannot be done remotely—as well as the plight of workers in sectors that may experience diminished activity amidst shocks or are employed by small businesses, which often have limited resources and capacity to support their workers and sustain employment and  the associated benefits such as employer-provided health care when external shocks occur. In addition, many workers lack protections (e.g., unemployment insurance) to weather these shocks.
14. Restart and accelerate job creation and growth. California’s unemployment rose from a historic low of 3.9 percent in February 2020 to 16.4 percent in April 2020 and 8.2 percent in November 2020. The COVID-19 pandemic made more than 6.4 million jobs in California vulnerable to permanent layoffs, temporary furloughs, or reductions in hours or wages. As public health concerns persist, consumer preferences evolve, and companies adopt new technologies and business models, many jobs lost in the pandemic may not return. Meanwhile, jobs that experienced high growth during the pandemic are not all quality jobs.
15. Apply, enforce, and extend workplace protections. The COVID-19 pandemic has highlighted the need to protect workers and workplaces, and support small businesses. California has some of the strongest worker protections that must continue to be fully enforced. Workplace protections must be extended in areas where they do not currently exist. Front-line workers and workers who must be physically present to work must have support to enable them to stay home when sick, have access to appropriate protective equipment, and be ensured safe and sanitary workplace

CONCLUSION

AALRR labor team lawyers are actively engaged in training employers in risk management, as well as in litigation defense before state and federal agencies. For direct assistance, contact any of our team members within our private sector labor and employment group across the state.

This AALRR post is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR publication does not create an attorney-client relationship. The firm is not responsible for inadvertent errors that may occur in the publishing process. 

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