According to the National Employment Law Project’s “Winning Wage Justice: A Summary of Research on Wage and Hour Violations in the United States,” pay violations are alarmingly high among employers of low-wage workers. Various occupations across the economy are affected, including restaurant and grocery stores, retail, domestic work and home care, manufacturing and construction, janitorial services, car washes and beauty salons.
Wage theft is the failure to pay workers the wages owed to them and takes on many forms, including paying less than the minimum wage or agreed-upon wage, requiring work without pay or working “off the clock”, not paying overtime, and simply not paying workers at all. HR compliance in these areas is necessary as understanding and adhering to current employment law can help avoid investigations, penalties and expensive lawsuits.
Julie Su Fights Non-Compliance
California Labor Commissioner Julie Su is dedicated to fighting wage theft to protect both workers and employers who comply, who she describes as her two main constituencies. She believes in protecting employers who are in compliance with employment and wage laws and low-wage workers who are victims of wage theft. She fundamentally believes in creating a culture of compliance.
She has done the following since being appointed in 2011:
- Discontinued random sweeps of workplaces
- Changed the agency’s measure of success from the number of violations found to the amount of compliance increased in the employer community
- Created a Criminal Investigation Unit (CIU) in 2012 to target employers who violate wage laws
The Criminal Investigation Unit
The Criminal Investigation Unit was created to investigate employers who practice wage theft and other crimes against workers. The CIU has sworn peace officers reporting to the commissioner and they train Department of Labor Standards Enforcement (DLSE) staff to identify cases that can be referred to the CIU for further investigation. The CIU also handles complaints and reports labor theft, worker’s compensation fraud, kickbacks, child labor issues, bounced paychecks and unlicensed farm workers.
Wage theft violations can lead to expensive assessments against employers, including back wages, fines and mandatory contributions to resources such as training funds. California employee labor law requires employers to pay employees who have specific skill sets and qualifications at a certain level under the California prevailing wage. Ace Heating & Cooling racked up over one million dollars in costs for grossly underpaying sheet metal workers. They were paying $8.50 to $16 an hour when they should have been paying $39 to $46 per hour. Wage theft also occurred in Bloom Energy Corporation, where they were found to be in violation of the Fair Labor Standards Act (FLSA) and California prevailing wage law by paying workers as little as $2.66 per hour. They were ordered to pay back wages and were also charged a civil penalty. Other high-dollar wage theft violations have resulted in multi-million-dollar settlements.
Businesses that need help understanding and complying with California employee labor law, prevailing wage and the FLSA can find it from the Department of Industrial Relations’ DLSE. Their website has information about following proper payroll guidelines, income tax withholding, workplace posting requirements and other important wage and payroll compliance topics. The Labor Commissioner’s website has prevailing wage FAQs, material regarding wage claim adjudication and information about the Wage Theft Prevention Act.
HR Compliance is essential to business function and according to Julie Su’s approach, those who are in compliance do not need to be in fear of a targeted audit. If your business needs assistance in compliance, talk to PAYDAY. There are a variety of HR Solutions to choose from to fit your needs.