Spa Nailed for $1.2 Million, “Wage Theft”  

The California Labor Commissioner’s Office has announced large citations against Young’s Nail Spa in Temecula, for misclassification of 36 workers as independent contractors and for wage theft, paying by the service instead of paying them hourly and overtime in spite of 50-hour weeks. The salon was also faulted for failing to provide appropriate meal and rest breaks.  The total $1.2 million citation included:

• $126,702 for minimum wage violations, plus $144,076 in liquidated (automatic) damages for such violations, plus $17,735 interest;
• $118,825 for unpaid overtime;
• $87,155 for missed rest periods;
• $18,103 for meal period violations;
• $65,312 for lack of itemized wage statements; and
• $92,492 for failing to provide proper final paychecks.

The Commissioner also imposed $572,187 in civil penalties, including $160,000 for misclassifying workers as independent contractors, $104,000 for not having proper wage statements; $100,300 for wage violations; and $207,887 for not having workers’ compensation insurance.

The case arose on referral by the Labor and Workforce Development Agency (LWDA) from an initial worker complaint alleging violations under the Private Attorney General’s Act (PAGA).  PAGA directs an aggrieved employee to notify the LWDA of an employer’s purported Labor Code violations.  If the LWDA chooses not to investigate, that worker may bring a direct legal action for himself or herself as well as for all co-workers similarly affected.

In her announcement, Labor Commissioner Julie Su stated: “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. 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.”

Any small business owner can imagine the devastating effect such a citation would have. To avoid these potential repercussions, employers should regularly review their employment practices to confirm compliance with current federal, state, and local law.

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Helena Kobrin

August 1, 2018