Labor Commissioner Cites Nail Salon $1.2 Million for
Misclassification and Wage Theft of 36 Workers
Oakland—The Labor
Commissioner’s Office issued more than $1.2 million in wage theft citations to
a Temecula nail salon for misclassifying and failing to properly pay 36
workers. An investigation found that the workers at Young’s Nail Spa were not
paid an hourly rate and not paid overtime despite working up to 50 hours a
week.
“Using
misclassification as a business model not only denies workers of their rightful
pay, but also gives the employer an unfair advantage over law-abiding
businesses,” said Labor Commissioner Julie A. Su. “California law is clear that
if employers pay less than the minimum wage, when they are caught they will be
responsible for paying not just the wages owed, but an equivalent amount in
liquidated damages plus interest.”
The
Labor Commissioner’s Office launched its investigation when the Labor and
Workforce Development Agency referred the case following notification of a
complaint filed through the Private Attorneys
General Act. Investigators
audited the business records over a 40-month period and determined that 36
workers employed at the salon were paid for each salon service performed
instead of the total hours worked. Shifts averaged 9.5 to 10 hours per day but
workers were not properly paid for overtime, nor provided proper meal and rest
breaks. Young’s Nail Spa also failed to carry valid workers’ compensation
insurance coverage during the last three years.
The
$1,242,227 citation amount includes $670,040 payable to workers and $572,187 in
civil penalties. Of the total due to workers, $126,702 is for minimum wage
violations plus $17,375 in interest, $144,076 for liquidated damages, $118,825
for failure to pay overtime, $92,492 for not providing final paychecks as
required by law, $87,155 for improperly paid rest periods, $65,312 for not
providing proper itemized wage statements, and $18,103 for meal period
violations.
The
civil penalties include $207,887 for failure to maintain valid workers’
compensation insurance, $160,000 for misclassifying workers as independent
contractors, $104,000 for not providing proper wage statements and $100,300 for
penalties associated with the wage violations.
Enforcement
investigations typically include a payroll audit of the previous three years to
determine minimum wage, overtime and other labor law violations, and any
payments owed and penalties due are calculated. Civil penalties collected are
transferred to the State’s General Fund as required by law.
Required
workplace postings on wages, hours and
working conditions must be posted an area frequented by employees where it may
be easily read during the workday. Nail salons have a specific posting required
for all Barbering and
Cosmetology Licensees.
Worker
misclassification is the practice of
knowingly misclassifying an employee as an independent contractor. It deprives
employees of minimum wage and overtime protections, as well as workers’
compensation coverage if injured on the job, and creates an unfair playing
field for responsible employers who honor their lawful obligations to their
employees. The Labor Commissioner’s Office enforces laws prohibiting the
willful misclassification of workers.
When
workers are paid less than minimum wage, they are entitled to liquidated damages that
equal the amount of underpaid wages plus interest. If a worker quits, final wages are due within 72 hours of the notice.
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
Division of Labor Standards Enforcement, or the Labor Commissioner’s Office, is
the division within the Department of Industrial Relations (DIR) with
wide-ranging enforcement responsibilities including adjudicating wage claims,
inspecting workplaces for wage and hour violations, investigating retaliation
complaints and educating the public on labor laws.
In 2014, Labor Commissioner Su launched the Wage Theft is a Crime multilingual
public awareness campaign. The campaign defines wage theft and informs workers
of their rights and the resources available to them to recover unpaid wages or
report other labor law violations.
Employees
with work-related questions or complaints may contact DIR’s Call Center in
English or Spanish at 844-LABOR-DIR (844-522-6734).