Wage & Hour News

$1.6 Million California Labor Lawsuit Launched Against Farm Labor Contractor

Monterey, CA The labor commissioner for the state of California continues her pursuit of alleged labor law violations in her state, with the recent filing of a $1.6 million California labor lawsuit against a farm labor contractor. At issue, according to US States News (11/16/12), are multiple violations involving about 150 workers in various locations scattered throughout Monterey County.

The suspected violations to California labor code allegedly committed by Zavala Farms include failure to provide wages approaching minimum wage levels and failure to pay overtime.

Zavala Farms is a farm labor contractor based on Greenfield. The California Department of Industrial Relations' (DIR) Division of Labor Standards Enforcement launched an investigation based on a complaint to the office of the Labor Commissioner.

The resulting investigation reportedly uncovered numerous violations to California and labor law spanning a period of three years from April 1, 2009 through April 1, 2012.

The allegations are that Zavala Farms failed to pay proper wages, or overtime when workers exceeded a standard 40-hour workweek or 8-hour day, in direct violation of California labor employment law.

State employment guidelines serve as a template of minimum standards for employers to maintain with their respective workforce. Of course, employers have the right to pay their workers at a higher rate than minimum wage??"a rate that would also serve to increase overtime premiums. Nonetheless, workers in California have a right to a basic basket of minimums pertaining to rates of pay, overtime and working conditions.

When such conditions are not met, the activity serves as a contravention to labor code. Employers can be fined, charged or sued. In this case, California State Labor Commissioner Julie A. Su chose to launch a California labor lawsuit against the alleged perpetrator.

"These workers picked lettuce and worked in grape fields over ten hours a day without receiving overtime pay," said Labor Commissioner Su. "This lawsuit is but one example of our commitment to conducting in-depth, meaningful inspections to get the wages earned into workers' pockets. When workers come forward, as these farm workers have done, to tell us about illegal working conditions, we will take action to protect them."

The lawsuit, noted Su, also serves to protect those employers who 'do it by the book,' only to be penalized by competitors who can undercut bids to get work, through shortchanging their workers to keep costs down. The practice only hurts law-abiding employers who respect and adhere to California prevailing wage law.

Christine Baker, Director of DIR, noted in the press release that the lawsuit "demonstrates the Labor Commissioner's commitment to ensuring that all workers in this state are protected by the wage floor. Whether it is in agriculture or any other industry where wage violations occur, we will enforce California employee labor law."

The California labor lawsuit seeks $1.6 million in unpaid wages overtime and penalties for the affected workers. The action was filed in Monterey County Superior Court.

November 5, 2012

“Off-the-Clock California Overtime Lawsuits on the Rise", says Employment Law Attorney

Encino, CA Employment law attorney David Yeremian says that employees are increasingly contacting him regarding off-the-clock claims and lawsuits, a violation of the California labor law. One possible reason for the increase is that workers are becoming more familiar with California employee labor law and California state labor laws.

Employees are usually working “off-the-clock” when an employer forces or pressures workers to work outside of hours that are not clocked in. “Employers are facing pressures to keep the bottom line and expenses down,” says Yeremian. “An obvious solution is to not pay their employees California overtime and/or under-report hours they are working.”

Yeremian sees many off-the-clock claims from the construction industry, where workers don’t have traditional time clocks: either they self-report hours on written time sheets or their supervisors write up a 9 to 5 day. But in reality they could be starting work hours earlier, and leaving later.

“We also see this California overtime violation in the retail industry,” adds Yeremian. “Employees are clocking out and subject to security checks, so they are locked into the store, or wherever they happen to be working.”

One example of this California labor law violation and subsequent California overtime lawsuit involved Costco employees who were held hostage- they were locked in the store after clocking out while management performed closing duties. Because Costco violated the United States Fair Labor Standards Act, a federal judge in California ruled the the Costco employees’ overtime lawsuit could proceed as a state class action in California and a conditional collective action nationwide.

Yeremian says the rise in off-the-clock overtime claims is that the enforcement of labor laws has increased with the prevalence of class action lawsuits. “Workers are increasingly more aware of their rights and employers have been sued for one labor violation or another in the past, but employers still think they can get away with it,” he explains. “And there are simply forces of human nature: Managers have a lot of pressure by upper management and owners to keep costs--especially labor costs--down. That translates to under-reporting and off-the-clock work.
“These overtime violations are typically happening with hourly and minimum-wage workers who are less apt to know their rights and are taken unfair advantage of. And they are less apt to enforce their own rights, particularly in an economy that recently had a downturn. Employees are simply afraid to speak up for fear of losing the only job they have, and there aren’t too many job vacancies right now.”

Be Pro-Active with Off-the-Clock Overtime Claim

If you are thinking about filing an off-the-clock overtime claim, Yeremian advises the following:

1. Keep track of your hours. Write them down in a journal, a calendar, a diary, anything. You have the right to report this uncompensated time to your supervisor and the law protects you. You are protected even though you may be incorrect regarding how you are supposed to be paid. As long as you have a good faith belief that a violation occurred and are terminated, demoted or suspended for reporting such a violation you may have a claim for wrongful termination or retaliation against your employer.

2. Report off-the-clock hours to you supervisor, HR, company owner (if you work for a small company), the California labor board (free of charge), and a California employment attorney. The vast majority of wage and hour lawyers will provide a free consultation over the phone and if they agree to represent you in a case, they will do so on a contingency basis??"meaning you don’t have to pay out of your pocket.

3. Talk to your co-workers and see if they are having similar problems. When one worker is suffering from these types of wage violations, typically other workers are in the same boat.

If you bring a class action lawsuit to obtain proper compensation for these violations, you can obtain compensation on behalf of yourself and everyone else who has suffered the same violation. Furthermore, if you bring the class action, you may be awarded an additional sum from the court due to bringing the case forward.

If you have been terminated or demoted from work, you may have a claim of retaliation against the employer. Through that claim you may be able to recover damages, including lost wages, emotional distress and if severe enough, punitive damages.


At what Point would my Employer know that I have filed a claim against them?

Many workers are reluctant to bring a claim against their employer because it might lead to a hostile work environment. But employers will not know that a claim has been filed until they have actually been served with the complaint.

“For most California wage and hour violations, employees have three or four years within which they can bring a lawsuit,” says Yeremian. “But of course I encourage employees who believe they are suffering from these overtime violations to contact an attorney or the California Labor Board at their earliest opportunity because some types of remedies-- such as penalties--are only recoverable for violations that occurred within the last year.

In certain types of cases where the court finds that the employer has violated minimum wage laws by failing to compensate employees for all hours worked, the court may award double the unpaid wages to the employee.”

Yeremian and his law firm recently filed a case against a large retailer alleging that there is a systematic under-reporting of actual hours worked by employees who work in distribution centers. “A former employee??"she worked stacking boxes??"called us with her complaint,” he explains. “In her case, which includes her co-workers, they would clock out at the end of their shifts and would then be forced to wait at a security check line, sometimes up to 15 minutes in order to be inspected for theft. We are looking at hundreds of employees coming off the line at the end of a shift all at the same time and then waiting for the bag and coat security check.

These employees will likely have their day in court.”

David Yeremian is an experienced litigator and business counselor and co-founder of Orshansky & Yeremian LLP. He has worked on a wide variety of litigation matters including employment, real estate, securities, shareholder and partnership disputes, contract actions and business fraud.

October 23, 2012

California Realtor Settles Labor Lawsuit for $5 Million

Emeryville, CA A California labor lawsuit has been settled, with the defendant admitting to no wrongdoing against allegations brought by the Office of the California Labor Commissioner, according to a report by Thomson Reuters news service (10/1/12).

The Labor Commissioner alleged that ZipRealty failed in its mandate to pay California real estate agents minimum wage and overtime, as dictated by California labor law at the time. The defendant maintained, according to the report, that real estate agents working as agents of ZipRealty were commissioned agents only, and thus were paid commissions on those transactions.

The California Labor Commissioner, however, held that ZipRealty sales agents were classed as outside workers at the time and thus, would qualify for minimum wage and overtime according to California labor employment law.

The plaintiffs in the lawsuit originally sought $17 million in damages and compensation. However, according to the Thomson report the Office of the Labor Commissioner and ZipRealty settled on $5 million in exchange from a release from the Labor Commissioner related to all claims, in addition to no admission of wrongdoing.

ZipRealty, according to a statement made by the firm's President and CEO, felt the lawsuit was without merit. "We are settling this matter because we believe it is in the best interest of our customers, agents, employees and investors to avoid the cost and risk associated with trial," said Lanny Baker, "and to instead devote our resources to strengthening the technology-enabled solutions we provide to consumers, agents and other leading brokerages."

There was no statement from the Office of the California Labor Commissioner, in the report denoting the alleged violation to California and labor law.

It was reported the $5 million, as agreed in the settlement between the two parties, would be held on account for distribution to those individuals who were employed by the firm during the time frame represented by the California labor lawsuit.

October 9, 2012

California Employment Bill Designed to Protect Workers' Rights

Chico, CA While one California labor lawsuit appears almost settled, some blue collar workers argue their California labor law rights are constantly being violated, bringing California labor code and federal labor laws to the forefront of the media's attention.

According to American Banker (9/28/12), Tri Counties Bank will pay up to $2.5 million to settle allegations made in a class action lawsuit that the bank did not properly pay employees for overtime hours worked. Specifically, the plaintiffs allege assistant branch managers were misclassified as exempt from overtime pay, a violation of California labor law. The bank will pay between $2.1 million and $2.5 million, depending on how many class participants file claims.

Meanwhile, California Governor Jerry Brown signed into law a bill designed to protect people who work as temporary labor in warehouses and distribution centers. The bill requires the agencies that provide workers for the warehouses and distribution centers to provide documents proving they obey the laws and can pay their workers. The bill will take effect January 1, unless delayed by legal action.

The bill's supporters say it will help ensure temporary workers are paid for the hours they work and have safe working conditions.

In September 2012, warehouse workers who load trucks to deliver to Walmart walked off the job protesting what they called terrible working conditions. A letter reportedly sent to Walmart executives (found online at takeaction.walmartwatch.org) cites unsafe working conditions??"including broken equipment and inadequate access to clean drinking water??"low pay and common injuries. "Right now, the temperatures in Riverside and San Bernardino top 100 degrees daily and inside the metal containers the temperature can get up to 120 degrees," letter writers Limber Herrera and Marta Medina write. "There is little ventilation and the heat and pollutants we inhale can make us vomit and bleed from the nose. We face intense retaliation from management if we say anything about the conditions."

According to Huffington Post (9/14/12), Marta Medina, one of the letter writers, reportedly reached her limit when she was eight months pregnant and told to ship 2,000 boxes in one hour. Workers at the warehouses are not directly employed by Walmart, but are instead employed by subcontractors.

A spokesperson for Walmart said service providers and subcontractors are expected to comply with the law.

October 2, 2012

Misclassified Engineer and California Labor Law—Overtime Lawsuit?

Sacramento, CA Brian was told that, due to the “criteria" with his new position, he is not eligible for overtime compensation. But Brian is familiar with the California labor law and disagrees, believing he has been misclassified as exempt.

Brian is a field service engineer. Although engineers in California’s software industry are amongst the most misclassified of professions, Brian’s job isn’t dissimilar. “Say a customer has a broken pharmaceutical instrument??"I go to their facility and repair it on site and that’s basically my job description,” he says. Brian doesn’t design or implement anything, nor does he supervise anyone.

“I thought exempt means that you have people you are responsible for, which I don’t,” Brian says. “I asked my supervisor for the exact definition of exempt. He just answered by saying that my job is exempt. Period. That isn’t much of an answer.”

Brian’s previous employer did pay him overtime. It was the same position, going to the same pharmaceutical companies with the same type of repairs. But he was paid hourly??"his present job is paid by salary.

“When I was hired by the company I work for now, I asked about overtime; from past experience I know that the job means long days,” says Brian. “They told me right away that I wouldn’t get any overtime, so I asked what happens if I work 12-hour days, which I did often in my last job. I was always paid two hours at time-and-a-half and after that double time. My employer said it would only happen once in a while. I started this job last October and since that time I have worked 12 hour days three times a week, every single week.

"I still want my employer to explain why I am considered exempt. What is most annoying is that I got the evil eye because I asked. When I told him that every other company like this one pays overtime, he told me to ask HR. I just gave up, afraid of being labeled a troublemaker.”

The last company Brian worked for was much larger than this one, and their policy was straightforward??"they adhered to the California labor code. If anyone worked past 12 hours, they were paid double time. The company he works for now is much smaller, but the California labor law still applies.

Although the company he works for now employs about 15 engineers, Brian says the others have different circumstances. “This company was originally Canadian and a California company purchased it,” he explains. “The other engineers are Canadians??"they definitely don’t want to rock the boat! Some are in-house engineers so I don’t know what their status is, but all the external engineers are like me, exempt.”

Brian’s next move mainly has to do with his year-end review. “I am waiting to see what my review looks like,” he says. “If I start slowing down to 8-hour days, my review will likely say I don’t get the job done. If it is at all negative I will be pissed because I know I am getting the job done. And if it is negative I will continue to push hard for overtime because I will likely get laid off anyway…

"However, on a positive note, I was told that California labor laws are some of the toughest for overtime. They favor the employee so I am hopeful that this company will comply with the labor law. I considered working for other companies in other states such as New York, but this California company came out ahead. I hope.

"Meanwhile, in these tough economic times, I will just shut my mouth. Even though I am happy to do all of the work, I just want to be compensated for it. I haven’t figured out how much I am actually owed but I believe this company owes me thousands of dollars in overtime pay.”

Brian has to weigh the odds and decide whether he wants to make a California overtime claim, at the risk of getting laid off. At the same time, Brian also knows that his employer runs the risk of paying double the amount of overtime compensation if retribution is involved. A California labor law attorney will be able to assist Brian in making a decision.

September 24, 2012

Nurse Says She Is Stuck between California Labor Law and Her Union

Rockland, CA Jeanine, a registered nurse and a member of the California Nurses Association, says her employer has violated the California labor law and her union isn’t backing her up. Instead, she took her issue to the California Labor Commissioner’s Office. Next up, a labor law attorney and possible California labor lawsuit against her union…

“Part of my contract with the Nurses Association is to pay me $75 per month for continuing a critical care certification,” Jeanine explains. She has been certified as a critical care nurse for 30 years and prior to becoming unionized, the hospital where she works paid this fee. Now, however, that $75 per month is part of her union contract, and therein lays the problem…

It recently came to Jeanine’s attention that she hadn’t been paid this extra $75 per month for at least the past 18 months, so she complained to her immediate supervisor. Keeping in mind this is not a violation on bonuses, but part of her union contract, Jeanine believed her employer was contractually obligated by law and not paying her would be a violation of the California employee labor law.

Jeanine isn’t alone with this issue - several other nurses haven’t been paid their $75 per month either. Her supervisor told the nurses to give him a copy of their certificates and he would submit them to HR, but Jeanine gave it to her supervisor’s secretary.

“HR said they never got the documentation,” says Jeanine. “Their interpretation of the contract was that they were morally obligated but not contractually obligated by law because our contract states that the certificate needs to be submitted to HR. However, they acknowledged that I had given it to my boss’s secretary. Of course nobody remembers.”

She brought up this issue with her union, to no avail. “The union met and decided they were not going to take this to arbitration. I don’t know why our union isn’t on our side. Furthermore, I asked to be a part of the arbitration selection process because the mediator - who works as the hospital administrator-- was obviously biased. He more or less blamed this issue on me and said that I should be looking at every paycheck.”

Like so many employees these days, Jeanine gets her pay stub electronically - she has to look online for details. And it gets automatically deposited. Sometimes her paycheck varies, depending upon nurses overtime, so it is easy to see how she could overlook a shortage of $75 per month for the past 18 months.

Because the Nurses Union wouldn’t help, Jeanine went to the California Labor Commissioner’s Office. She is familiar with the California labor employment law, having practiced law for six years (she became an attorney in 2001) before going back to nursing - her passion.

“I met with the hospital’s attorney and the labor relations representative - the Labor Commissioner set this up for me after I requested a hearing,” says Jeanine. “At the hearing they said that unfortunately, they would not take my case because it was a matter of interpreting a labor relations contract and that would make it a federal issue. So my only option would be to get an attorney and go to federal court. The amount of money in question is only $2,300 so that won’t happen.

"National Labor Relations is federal law and when that gets breached, you don’t have normal recourse within your state - it becomes a federal issue. You can’t even take it to small claims court so you are totally dependent on your union to represent you in these matters. And I don’t have an attorney that will take my case for a few thousand dollars, unless there are other nurses in my position that want to come forward.

"So I am stuck because my union won’t do anything for me and this has become a federal issue. ‘You are a victim of all the procedures,’ the Commissioner told me; she didn’t give me a lot of hope. The California Labor Commissioner isn’t hopeful that they can do anything if an issue is in any way federal.

"Bottom line, I think our union should be held accountable - they are obligated to represent their members. But the contract says they may consider arbitration - may’ is just another weasel word to get out of arbitrating on behalf of its members.

"The Labor Commissioner said I would be wise to change the contract but it is just another path of frustration for me. I like nursing and taking care of my patients so I don’t want to spend time and money fighting my union. Lesson to be learned: I think people should be very careful when they bring in a union and they should make sure that the union is representing them. We have a runaway union that has their own agenda.

"Now I think that I have a good faith case against my union, especially since I have been a critical care member for over 30 years. I thought about all the union dues I have paid all these years, but perhaps I just have to let this one go.

"And another lesson to be learned: read your contract in detail and check your pay stubs.”

September 11, 2012

Appeals Court Rules Insurance Adjusters Can Claim California Overtime

Los Angeles, CA A California Court of Appeal in July 2012 ruled in favor of insurance adjusters claiming California overtime pay. The case originated from a class-action lawsuit filed by a group of adjusters against Liberty Mutual and its subsidiary, Golden Eagle Insurance.

Courts--and the California labor law--have typically held that adjusters are professional employees and therefore exempt from overtime pay??"even if they worked 60 or 70 hours per week. But increasingly, claims personnel, including insurance adjusters, are saying that their duties are those of glorified administration clerks, mainly due to technology and micromanaging and that they are adjusters only in their title.

Insurers in the case, Frances Harris et al. v. Superior Court of Los Angeles and Liberty Mutual Insurance Co., argued that adjusters are exempt administrators because they do not produce the company's product. According to court documents, the product is the transference of risk, not claims adjusting, and therefore not entitled to overtime compensation.

The court, however, found that Liberty Mutual shows claims adjusting as "an important and essential part of transferring risk. If the employers never paid any claims, then they would not be transferring any risks." Further, the court found that the adjusters were misclassified and entitled to overtime pay because the are not primarily working in a management capacity. The court argued that, if adjusters are exempt, every office worker, including secretaries at a law firm, is exempt.

Just days later, a South Carolina judge granted a conditional class certification allowing property claims adjustors to sue Farmers Insurance Exchange for allegedly not paying overtime (MacGregor, et al. v. Farmers Insurance Exchange). In July 2001, a California jury awarded a class of Farmers Insurance Company adjusters $90 million in overtime pay, according to Claims Magazine (May 2011).

(In October 2006 a 9th Circuit ruling rejected a Farmer's Insurance Exchange Class Action, arguing that all Farmers' adjusters are exempt because they exercise discretion and make independent judgments.)

September 8, 2012

Misclassified Construction Employee owed California Overtime?

Montrose, CA Chester, a former construction superintendent, believes he is misclassified and therefore owed more than $40,000 in overtime compensation, which could potentially be doubled if his employer is found guilty of California overtime violations.

“I am classified as exempt but I can’t hire or fire anyone,” says Chester. “I am just on the jobsite to make sure the project goes along without a hitch--I have to be on site while they are working to make sure nobody gets hurt, and make sure proper procedures are carried out. How can I be considered exempt when I report to others on the jobsite and at the company’s office—I am definitely not the boss in any capacity.”

Chester says he was the construction superintendent and project manager at different jobs over a period of five years. Most projects were involved with public works and government contracts and they were time-sensitive. “If we had a job order contract with a government agency, work had to be done at night and weekends,” he says. “I still did my regular 40-hour week job so all nights and weekends worked should have been overtime.

"We worked on the Rose Bowl renovation in Phase 1, and had to finish the Gold Cup soccer match by a certain date, so we worked around the clock. Typically we worked 10 hours overtime per week and it was simply expected of me. For several months after the Rose Bowl I worked about 300 hours overtime so I finally brought up the overtime issue with my employer.

"Because I am on salary he said I couldn’t have any overtime compensation. I told my boss that wasn’t fair because contractors and sub-contractors got paid overtime at the Rose Bowl job but I worked for a general contractor. According to public works, our sub-contractors had to turn in a certified payroll every two weeks, showing how many hours the guys worked and that they were getting paid for hours worked. During the Rose Bowl reno, guys working for the sub-contractor got paid a lot of overtime, but everyone with the general contractor Angeles Contractors Inc., the company I worked for, didn’t get any overtime."

Instead of overtime, the general contractor placated Chester with comp time—more vacation time. But Chester figures a few weeks more of vacation time per year doesn’t amount to $40,000. Getting vacation time in lieu of overtime is also a California labor lawviolation.

Angeles Contractors laid off Chester last month. He thinks it is because he asked for overtime pay. Chester says that if he made an issue out of any labor laws violated by the company, his employer told him that he won’t get any job recommendations.

“When I was hired, my boss said I had to work overtime if the project needed it,” explains Chester, who was OK with that—for a while. “But these projects are increasingly more demanding with my time. I have some records of my overtime hours going back at least three years and that is how I came to this amount owed to me.”

Chester’s complaint is similar to that of a construction superintendent employed by F.H. Paschen--a general contractor and construction company with offices nationwide. He was misclassified as exempt from overtime and denied compensation for time worked over 40 hours per week. He sued on behalf of all construction superintendents employed by F.H. Paschen in California for a number of California labor code violations. The court certified the case for class treatment in February 2005 and a settlement of $1,080,000 was reached on behalf of 84 class members.

And in 2008, a group of construction workers filed a California overtime lawsuit alleging they were made to skip breaks, travel without compensation, and sign blank time sheets, as well as not getting paid for overtime work.

Increasingly, people working in the construction industry are realizing their rights to overtime and other California labor laws.

September 7, 2012

Working at California Car Washes

Los Angeles, CA Car wash owners are notorious for breaking California labor laws. In May 2012, four car wash workers filed a California overtime class action lawsuit alleging that they had to arrive early to work but they clocked in when there were enough cars to wash.

Just two months prior to this overtime lawsuit, two other lawsuits were filed against three Los Angeles car wash businesses -- Rosecrans King Car Wash, Wilshire Car Wash and Vermont Auto Spa -- for California labor code violations, including failure to provide minimum wage, failure to provide meal and rest periods, and overtime pay to employees. The plaintiffs are seeking unpaid wages, penalties and damages totaling more than $2 million.

Because car wash employees, or “carwasheros”, are classified as non-exempt, they must be paid for all hours worked. If their hours exceed more than 8 hours per day, or 40 hours per week, they must be paid overtime at a rate of 1.5 their regular rate of pay. And in the state of California, they are entitled to a 30-minute lunch break and two 15-minute rest breaks during an 8-hour shift.

Furthermore, if a carwashero receives tips, those monies belong to the employee, not the manager. And tips cannot be deducted from the regular rate of pay, which would be contrary to the California labor law.

Aren’t car wash employers familiar with California labor laws? Do car wash owners weigh the odds and decide that it’s more cost effective to break the law than pay their workers minimum wage and overtime? Say the car wash employer??"or any employer for that matter---has a class action lawsuit filed against them.

“In many class actions your typical opt-in rate may be only 20 percent, so there is a big incentive for employers to break the law,” says attorney Allen Vaught. “Many employers take the risk, and if they get caught, it’s no big deal.” In other words, employers make more money by breaking the law and paying the penalty because not everyone is going to join the class action lawsuit. Workers typically don’t come forward because they are afraid of retaliation??"but retaliation is another violation of the California labor code."

However, the gamble may not pay off. “An employer has to pay double the amount due, unless they have a good faith basis for not having paid overtime to their employees,” adds Vaught. “And they must pay legal fees.”

Vaught wishes there were stiffer penalties for overtime violations. “There is no mechanism for punitive damages so economically it makes more sense to break the law.”

Meanwhile, lawsuits will continue. But conditions for car wash workers may be improving, given a recent overtime settlement.

In January 2012, a settlement of $800,000 was reached in favor of employees at eight car washes in California. The car wash owners were alleged to have not paid overtime, falsified payment records, and denied workers rest and meal breaks.

August 13, 2012

Is Cost-Cutting Wal-Mart Bad for California Labor Law?

Sacramento, CA A decision by the world's largest retailer to outsource its supply-chain and logistics to third-party companies, who then are said to hire poorly-paid temporary workers, has succeeded in the overall lowering of wages and benefits for US workers in the state and has turned back the clock on hard-won improvements under California labor law.

That retailer is Wal-Mart Stores Inc. The National Employment Law Project, a labor organization advocating for low-wage workers, released a study critical of Wal-Mart and how it has decimated wages and benefits in the name of cost control. Some of the criticism translates as an affront to California labor code.

The Los Angeles Times (6/6/12) reported on the study, which relates to a large warehouse wholly-owned by Wal-Mart in Mira Loma, south of the Los Angeles / Ontario International Airport. The massive retailer has a partial ownership stake in another warehouse facility as well.

The study, according to the LA Times report, found that Wal-Mart has cut its costs on the supply side by outsourcing the operation of its warehousing, and the delivery of inventory. Those third-party entities, according to the study, will often hire Latino workers and pay them less??"sometimes at rates which fall below the stated minimum wage as identified under California labor code.

The Times report referenced a California labor lawsuit filed this past October against Wal-Mart's prime subcontractor, Schneider Logistics Inc., as well as Impact Logistics Inc. and Premier Warehousing Ventures. The complaint included allegations that employees were "forced to work long hours, under oppressive conditions for legally inadequate pay," sometimes below the state minimum wage of $8 an hour, according to the Times report.

The study "is not in any way suggesting that using subcontractors is a bad thing in and of itself," said Catherine Ruckelshaus, one of the authors of the study. But "when you're acting like Wal-Mart and exercising control at the warehouse and insisting on low cost, low cost, it puts pressure on the contractors and others in the chain to do work for subpar wages and under unhealthy working conditions," she said.

The state of California has previously levied fines in excess of $1 million against Impact Logistics and Premier Warehousing for violations of California labor employment law. Those violations are said to have included improper pay records and the failure to maintain itemized pay statements for hundreds of temporary workers.

Critics of the Wal-Mart model have observed other major retailers have dipped their toes into the third-party waters, in an effort to cut their own costs and compete with the retail juggernaut.

The California and labor law report noted that Schneider denied any wrongdoing, while Premier and Impact failed to respond to requests for comment. The Times repot noted that Premier cancelled its contract with Wal-Mart, while Schneider agreed to hire the workers as direct employees and pay them a wage of $12.75 per hour plus benefits. Under California labor employment law, workers must be paid a minimum of eight dollars per hour, and be provided with regular meal, and rest breaks.

A spokesperson for Wal-Mart noted in a statement that the giant retailer holds "contractors and subcontractors to the highest standards and expects them to comply with all applicable laws," according to California employee labor law, noted Dan Fogleman, in comments published in the LA Times.

June 18, 2012
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