Seyfarth Synopsis: Halloween was last week, and you probably thought all the scary ghouls and goblins were going to rest for another year. Do not relax just yet! This week, we discuss another process that can be scary for California employers—wage claims filed with the Labor Commissioner. We discuss the process below with the hope of providing some clarity.
I Got This “Notice of Claim and Conference”…What Do I Do Now?
The first communication from the Labor Commissioner typically is a somewhat confusing document called a “Notice of Claim and Conference.” Getting such an official notice from a government agency can be unnerving—especially if you do not know what it means. But fear not! It is a lot simpler than it looks.
This ominous-seeming document is just to tell you that an employee has filed a wage claim and that the Labor Commissioner is going to hold a meeting to discuss the claim. That meeting is called the conference. Not all cases have a conference. In those that do, the Deputy Labor Commissioner (“Deputy”), usually a non-lawyer, will usually do three main things: (1) determine the nature of the claim (to ensure there is jurisdiction); (2) determine the amount of the claim; and (3) attempt to settle the claim.
What do you do to get ready? Gather (as best you can) the information about the claim and be prepared to discuss it as needed with the Deputy. Pay special attention to what the employee is saying about the case, because often this is the first time you will hear why the employee feels entitled to more money. Remember that the conference is not a trial, so do not expect the Deputy to “throw out” the claim at the conference—even if it is completely meritless!
If the case does not resolve at the conference, then the Deputy will set the case for a hearing on the merits. The hearing will usually be a few months down the road. At this stage of the process, there are only two ways to avoid a hearing: (1) settle the claim (you can often work with the Deputy who handled your conference) or (2) send a check for the employee in the amount claimed directly to the Labor Commissioner.
What Happens Next?…The Hearing.
You decided not to settle. What now? The next step, the hearing, is the big show in this process. But it might not feel like one since you may be in a small office-like room with just two tables, some chairs, and a tape recorder. No matter how informal it might feel, you should still treat it seriously. The testimony is under oath, and the Labor Commissioner can enforce any award against an employer the same way as a judgment in court!
At the hearing, there will be a hearing officer, who functions as the judge. The hearing officer is often a lawyer (though historically has not always been required to be one) and most likely will be a different person than the Deputy who presided over the conference. Once the hearing starts, the hearing officer will first allow the employee to testify, present documents, and call witnesses. Do not worry, you will get your chance, too. The hearing officer proceeds in this order because the employee has the burden of proving the claim. You or your attorney can cross-examine the employee (and any other witness). And, after the employee finishes, the employer also gets to present its own evidence.
Do not be surprised if the hearing officer considers “everything,” because the formal rules of evidence do not apply here. “Relevancy” is the only limiting standard. This is because the hearing process with the Labor Commissioner is intended to be streamlined and efficient. At any rate, once the hearing is over, the hearing officer will issue an “Order, Decision, and Award” or “ODA,” which is a written ruling of the hearing officer’s findings. That is where you find out who won or lost.
I Lost. What Can I Do?
You open your mail from the Labor Commissioner to read the ODA, which says that the employee has prevailed and that you owe money. Yikes! Are there any options for you? Of course there are—especially if you disagree with the award. First, if you want the situation to simply be over, you can pay the amount of the award to the Labor Commissioner by the date listed in the ODA.
There are other options. You can also file an appeal of the ODA in the superior court and continue the big show of the hearing into a second act! To file an appeal, the employer must file both a notice of appeal and either (1) a bond in the amount of the judgment or (2) a cashier’s check in the amount of the judgment. Do not wait to do this. You only have 10 days after the ODA is served to file the appeal and the bond/cashier’s check!
After you file an appeal, there are two options: (1) try to settle the case with the employee and (2) go through with the appeal process.
The “appeal” is a bit different than the normal court process, and there are some risks associated with it. First, the good news. The appeal is actually a whole new trial in front of a judge. The decision of the Labor Commissioner is given no weight, and the formal rules of evidence and trials apply. This means that there are more limitations on the evidence that can be presented and other more formal procedures must be followed.
Now for the potential downsides. If you lose (meaning that the employee is awarded any money at all), you can be liable for the employee’s attorneys’ fees. The employee may also be able to add claims that were not asserted before the Labor Commissioner, and you may have to respond to discovery (though neither is a given). In some cases, the Labor Commissioner may even appoint one of its own attorneys to represent the employee!
After the trial, there are options to appeal if you get another bad outcome. Depending on the amount of the award, the appeal may be to the appellate division of the superior court or to the Court of Appeal.
I Won, But The Employee Appealed. Now What?
You opened your mail from the Labor Commissioner and the ODA awarded the employee nothing. You won! But then, 10 days later, you get a notice of appeal from the employee. This can feel like having the rug pulled out from underneath you.
In this situation, the process is very similar, but there are some differences. The employee does not need to file a bond in order to appeal (there is no judgment against the employee). If you go through with the trial and win, the employer can actually get its attorneys’ fees! And losing employees are responsible for retaining their own counsel, too, because the Labor Commissioner does not represent employees who lost at the hearing.
Wage claims before the Labor Commissioner can be expensive and daunting. The best way to avoid them in the first place is to have solid wage and hour practices in place. Auditing your practices and staying informed with new laws is the best way do to this. Once a claim has been filed, an attorney can be helpful to talk through the claims and any strategy involved. Attorneys are required, alas, if you proceed in court!