Employees who believe they have been unlawfully denied wages, meal and rest breaks, or any of their other rights under California’s wage and hour laws, may file a claim with the California Division of Labor Standards Enforcement (“DLSE”), also called the “Labor Commission.” Of course, they might also file a lawsuit, or a complaint in arbitration (if there is an arbitration agreement), or a complaint with the U.S. Department of Labor. However, many employees choose to file claims with the DLSE due to the employee-friendly California labor laws and because the DLSE itself has a reputation of favoring employees in wage disputes. Employees may only file claims for wages, penalties, and other compensation before the DLSE. Other employment-related claims, such as discrimination, are outside the DLSE’s jurisdiction.

What’s After a California Labor Commission Complaint: DLSE Notice of Claim and Conference

An individual DLSE claim will take the form of a “Notice of Claim and Conference.” This notice will include a date, time, and location, where a company representative or attorney will need to appear. The Notice will also provide a list of documents and information your representative will need to bring. These documents may include business licenses, insurance policies, or other company documents, as well as records regarding the employee who brought the complaint. This “conference” will not be an adjudication on the merits of the employee’s claim. Rather, it will be a settlement conference in which the Labor Commissioner will go over the allegations in the Notice, discuss the parties’ respective positions, and try to resolve the claim.

The informality of the conference does not mean preparation is unnecessary.  You should:

  • review your employee handbook and any other document(s) that set forth your company’s policies regarding the matters addressed in the claim – for example, pay dates, overtime, breaks, and timekeeping;
  • pull and review the complaining employee’s timesheets (whether handwritten or electronic), their pay stubs, and (if separately kept) their payroll records;
  • review these documents with an eye toward whether you have paid your employee in a manner that complies with the law in light of their time worked.

Determining whether and when overtime was properly paid or when meal breaks were late and a one-hour premium was due, for example, are matters our experienced employment attorneys can assist you with. Having an understanding of your potential exposure will make the conference as productive as possible.

It is possible for the Commissioner to dismiss the employee’s claim outright if the Commissioner has no authority to hear it. For example, if the employee files a claim for harassment or discrimination with the Commissioner, it will be dismissed, because the Commissioner only hears wage and hour claims.

Berman Hearing

If, however, no settlement is reached and the case is not dismissed, the Commissioner will then set a date for what is called a “Berman” hearing, which is a formal hearing with the presentation of evidence and witnesses. The proceedings will be similar to a court hearing or trial. The Commissioner has subpoena power to summon witnesses to testify. Each side may also present witnesses. All testimony is given under oath, under penalty of perjury.

After the hearing, the Commissioner will issue an order. If the Commissioner decides in favor of the employee, you have the right to appeal, but the appeal must usually be filed within 10 days of service of the order.

 California Labor Commission Complaint: PAGA

If you receive notice of a complaint to the DLSE under the Private Attorneys’ General Act (“PAGA”), Labor Code section 2698, et seq., it is important to pay particular attention and to retain counsel.  A PAGA claim is a representative action – similar to a class action – brought by an employee on behalf of all potentially aggrieved employees at your company.

The PAGA statute allows private attorneys to sue for penalties that previously only state agencies – the DLSE and the California Labor and Workforce Development Agency (“LWDA”) – could sue to recover. 75% of penalties recovered by private plaintiffs under PAGA go to the state, with 25% payable to the employees. However, plaintiffs’ attorneys recover fees of 1/3 or more “off the top” of the total penalty amount.

Yet before an employee may file a lawsuit under PAGA, the employee must send a letter to the LWDA specifying the Labor Code violations alleged, and must provide facts and theories underlying their allegations. The LWDA then has 65 days to review, decide whether to get involved and notify the parties of its decision. The agency rarely becomes involved, but a potential plaintiff must wait 65 days after issuing the letter to file a lawsuit. This waiting period may also provide your company with a chance to “cure” certain violations under PAGA’s safe harbor provisions. However, attempting to “cure” requires that certain specific steps be followed. Also, not all violations are curable in this manner.

Key Takeaways

The bottom line is that if you have been denying employees breaks as required by law, failing to pay sufficient overtime, or failing to put all the required information on employees’ pay stubs, you could be liable to all your employees and to the State under PAGA for massive penalties. The law in this area is complex and subject to change with shifting legal precedent, so we recommend that you consult our employment attorneys as soon as possible if you have received a PAGA letter.

If you feel that you need assistance for an employment law matter, please contact Hackler Flynn and Associates.

DISCLAIMER: Content within this post should not be considered legal advice and is for informational purposes only. Communications made through this post do not create an attorney-client relationship. Hackler Flynn & Associates is not responsible for any content that you may access from third-party resources that may be accessed through or linked to this post. Hackler Flynn & Associates is only licensed to practice in California.

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