Defending Employers in Wage Claims and Claims Before the DLSE

Employers often receive wage claims from employees who have quit or have been terminated. Even small claims for unpaid wages, unpaid overtime, rest break and meal period penalties, etc can turn into large claims very quickly. Knowing how the system works and having an experienced attorney defending your interests is vital to minimizing or assessing your company’s financial exposure.

The Claims Process and Defenses

Any employee who has a claim against his or her employer, or former employer for unpaid wages may file a claim with DLSE. The DLSE operates under the direction of the California Labor Commissioner. The DLSE however cannot consider all claims. For example, the Labor Commissioner has no jurisdiction over persons determined to be bona fide independent contractors and, only limited jurisdiction over employees of public agencies such as federal, state, county or municipal employees. In addition, based on California law and court decisions, the Labor Commissioner may not have jurisdiction over wage claims of union members working under collective bargaining agreements. You need an experienced attorney to identify viable defenses and if necessary prepare you to defend claims that are allowed to proceed. 

The Labor Commissioner always has the authority to determine if it has jurisdiction over a wage claim. If a claim is allowed to proceed, Labor Code Sections 98 and 98.3, set forth the procedures for investigating wage complaints, which may include either a Conference pursuant to Section 98.3, a Hearing pursuant to Section 98(a), or both. Many claims filed with DLSE can resolved through Section 98.3 conferences which must be attended by a employer representative and or the employers legal counsel. Having an attorney can increase the chance of a resolution. 

A Labor Commission Hearing Attorney will help you to understand the claims being asserted by the former employer. Your attorney will also work with you to identify all viable defenses. With proper preparation and proper documentation, many cases can be disposed of where it is determined that there is sufficient evidence to support such claims. Attorney Evan A. Gould is highly experienced at representing employers in such hearings and in defending claims at an evidentiary hearing if required. 

If you receive notice of a wage claim from the DLSE it is very important to promptly collect the employee time and attendance records, payroll records, paychecks and pay stubs showing the wages paid during the claim period. Researching why any checks may have “bounced” during the claim could also be relevant to the issue of waiting time penalties and proving a late payment was not willful. Establishing proof that an employer complied with various positing requirements, such as those under Labor Code Section 2810.5, and proving that the employer kept accurate employee time and payroll records, provided employees with proper itemized wage statements can help disprove claims to the contrary. This may also cast doubt on claims by former employees who may be less then credible or have a ulterior motive or agenda. 

Within thirty (30) days of the filing of the employee’s complaint, the parties should be notified whether the claim is being referred for a Conference; a Hearing or has been dismissed. Not every 

case will go to a conference before going to a hearing so settlement discussions, if warranted, may need to be handled directly with the employee. Settlement negotiations are best handled by an attorney skilled in negotiation. It is also best to explore such options before the employee retains an attorney of their own. 

The Initial Conference

If the decision has been made by the deputy to hold a conference, a notice of the conference will be sent to both parties setting forth the claims and the time, date, and place of the conference. The conference will be conducted informally. One purpose of the conference is to determine if the claim can be resolved without a hearing. Both the Plaintiff and the employer defendant must be prepared to talk with the deputy about the claim, including whether there are any witnesses the parties would bring to the conference. It is always a good idea to bring a copies of any documents that support your position. If the employer fails to appear at the conference, in most cases, the claim will be scheduled for a hearing. If the plaintiff fails to appear, except for good cause, the claim will be dismissed. If the case is not resolved at the conference, the deputy will determine the appropriate action with regard to the claim. If there appears to be sufficient evidence to support the claim it will usually be referred to a hearing. If not, the claim may be dismissed if there appears to be no legal basis to proceed. Attorney Evan A. Gould can help you evaluate the claims being made, review the potential evidence, and assist you in determining the strength of the claims. This will allow you to determine the best course of action. 

Maybe I Should just Settle?

In many cases a prompt settlement make sense. If the defendant/employer makes payment of the claim in full, the case will be closed. If any other settlement is reached, the plaintiff may withdraw the claim by written request to the deputy which can occur at any time during the process. Attorney Evan A. Gould can help to determine whether a settlement is in your best interest. He can also negotiate payment terms if needed to facilitate a settlement of the claims that can be workable. As part of any settlement a properly drafted settlement agreement can protect the employer against “new” or “unknown” claims brought later by the employee. A well drafted settlement agreement can also include favorable terms such as a confidentiality provision and or non-disparagement agreement. Attorney Evan A. Gould can prepare a written settlement agreement designed to protect your interests. 

The Hearing:

If a hearing on the employee’s wage claims is scheduled, the parties will receive, by mail or by personal service, a Notice of Hearing which will set the date, time and place of the hearing. Although hearings are conducted in an informal setting, they are official proceedings. Unlike the initial conference, the parties and witnesses testify under oath, and the proceedings are recorded. 

At the hearing, each party has the following basic rights:

1. To be represented by an attorney.
2. To present evidence.
3. To testify in his or her own behalf.
4. To have his or her own witnesses testify.
5. To cross-examine the opposing party and witnesses. 6. To explain evidence offered in support of his or her position and to rebut evidence offered in opposition. 7. To have an interpreter present, if necessary.

Much like a superior court judge, the hearing officer has the sole authority and discretion for the conduct of the hearing and may:

1. Explain the issues and the meaning of terms not understood by the parties.
2. Set forth the order in which persons will testify, cross-examine and give rebuttal.
3. Assist parties in the cross-examination of the opposing party and witnesses.
4. Question parties and witnesses to obtain necessary facts.
5. Accept and consider testimony and documents offered by the parties or witnesses.
6. Take official notice of well-established matters of common knowledge and/or public records.
7. Ascertain whether there are stipulations by the parties that may be entered into the record.
8. Determine which witness may testify. 

An attorney should certainly be retained by this stage to assist you in determining which documents will support your position and may be helpful. An attorney can also assist you in preparing evidence for use at the hearing and deciding if it will be necessary to bring or prepare witnesses knowledgeable with business records and who can explain how such records were prepared or maintained. 

A proper defense may also require arranging for cooperative witnesses or arranging for witnesses pursuant to a personal subpoena which must be requested from the Labor Commissioner. Applications for the issuance of subpoenas should be made at least fifteen (15) business days prior to the date of the hearing and must set forth the reasons why the documents, records or witnesses are relevant or necessary. 

It is also important to note that requests for changes to the date, time or place of the hearing will rarely be granted except upon a showing of extraordinary circumstances. The decision to grant such a request is within the sole discretion of the hearing officer and senior deputy. 

If the plaintiff fails to attend the hearing, the case will be dismissed. If the defendant is served with a notice of hearing and fails to attend the hearing, the hearing officer will decide the matter on the evidence he or she receives from the plaintiff. 

The hearing officer is not bound by formal rules of evidence and therefore, has wide discretion in accepting evidence. He or she also has discretion in deciding whether the assessment of penalties is appropriate in a particular case. Since California employment law heavily favors employees, you need an attorney to help “level the playing field”. 

APPEALS FROM AWARDS MADE BY THE LABOR COMMISSIONER 

Within fifteen (15) days after the hearing, the Order, Decision or Award of the Labor Commissioner will be filed in the DLSE office and served on the parties. Either party, or both may appeal the Labor Commissioner’s ODA to the appropriate court, in accordance with the applicable rules of jurisdiction. The appeal must be filed in court within the time period set forth on the ODA, typically just 10 days, and a copy of the Notice of Appeal must be served on the Labor Commissioner and the opposing party. 

Whenever a defendant employer files an appeal, a bond in the amount of the ODA must be posted with the reviewing court. Only if a timely appeal and bond has been filed within the 10 day period, the court clerk then set the matter for a “de novo” hearing. This means that a judge will then hear the case as if it were being heard for the first time with each party having the opportunity to present their claims, defenses, evidence, witnesses and any new claims and offer new evidence. So while technically called an “appeal”, this is really handled as a new trial in the superior court where the parties are bound by formal rules of evidence, procedure and courtroom protocols. 

An appeal should not be taken lightly as an appeal may open the door not only to new claims, but also to claims for attorneys fees. Without experienced legal representation, many parties who make the decision to appeal come to regret that decision later. If you have ventured this far on your own, do yourself a favor and consult with an attorney before proceeding. If you have questions, contact the Gould Firm and Attorney Evan A. Gould for a free consultation. 

Attorney Evan A. Gould also represents Employers and Businesses in connection with EEOC hearings and other administrative proceedings.