Cheesecake Factory and Its Janitorial Contractors Assessed $4.57 Million for “Wage Theft”

The state Labor Commissioner has assessed Cheesecake Factory Restaurants, Inc. and two contractors hired for janitorial services some $4.57 million for underpayment of minimum wage and overtime to 559 janitorial workers at eight Southern California locations. The decision is a significant caution to every business enterprise in the state, responsible since 2015 under Labor Code 2810.3 for wage violations committed by contractors and subcontractors performing labor within that company’s “usual course of business” (regular and customary work of a business, performed within or upon the premises or worksite of that business [“client employer”]).

As part of her 2014 “Wage Theft is a Crime” campaign, Labor Commissioner Su stated: “This case illustrates common wage theft practices in the janitorial industry, where businesses have contracted and subcontracted to avoid responsibility for ensuring workers are paid what they are owed.” She continued, “Client businesses can no longer shield themselves from liability for wage theft through multiple layers of contracts. Our enforcement benefits not only the workers who deserve to be paid, but also legitimate janitorial businesses that are underbid by wage thieves.”

According to Commissioner Su’s news release, investigators found janitorial workers labored from around midnight to morning without proper meal or rest break periods. After eight hours, these subcontractor employees were not released until Cheesecake Factory managers reviewed the work, with frequent additional tasks before those workers were released. According to the release, this resulted in as many as ten hours of unpaid overtime per employee each week.

This result underscores the importance for California companies not only to ensure wage compliance for their own workforces but also to make it their business to monitor and confirm such compliance by firms contracted or subcontracted to perform labor within that company’s usual course of business.

It is vital for employers to know their legal obligations for paying their employees, and must also ensure that any workers employed through contracts and subcontracts are not subject to wage theft violations.

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

Tim Bowles

June 28, 2018