'It's So Unfair': Major Delays at State Labor Agency Leave Many Wage Theft Victims Unpaid

Thousands of California workers whose employers collectively owe them millions of dollars in unpaid wages are at risk of never seeing the money they earned, as the state watchdog agency investigating wage-theft cases is failing to resolve them in a timely way, according to labor enforcement experts and worker advocates.

Many of the businesses in question were cited by the California Labor Commissioner’s Office for systematically dodging labor laws, after investigators conducted lengthy reviews, including payroll record audits and interviews with employees.

Employers have the right to appeal those citations — which typically come with hefty fines — and most do, said worker attorneys. The next step is a hearing at the Labor Commissioner’s Office. But the agency, whose mission is to combat wage theft, can take years to schedule those hearings, delaying restitution for workers, most of whom are in lower-wage industries.

The longer the cases drag on, the harder it is for workers to collect what’s owed them, advocates said. The backlog has only worsened during the pandemic.

State Sen. Dave Cortese, D-San Jose, said the delays at the agency, also known as the Division of Labor Standards Enforcement, are “unacceptable.”

“This is exactly the opposite of what the government is supposed to be doing,” said Cortese, who chairs the state Senate Labor, Employment and Retirement Committee. “Government should be stepping in and policing these employers that are ripping people off, and it’s not happening. And it’s causing real pain.”

For workers living paycheck to paycheck, that pain is palpable.

Sonia Crisostomo, a 47-year-old single mother, worked as a prep cook and cashier at a San Francisco Burger King franchise from 2016 to 2019. But her boss consistently shorted her paychecks, and she is now owed more than $38,000, according to a June 2020 citation issued by state investigators.

If she had received at least some of that money in a timely manner, it could have saved her family from losing their apartment, she said. Instead, when her next job, cleaning offices, ended during the pandemic, Crisostomo was unable to make rent. She and her children moved into the crowded home of a relative and relied on food banks to eat, she said.

“I was left with nothing,” said Crisostomo, who said she’s not eligible for unemployment benefits. “It was really hard. … With at least some of that money, we wouldn’t have had so many limitations. I wouldn’t have left my apartment, I wouldn’t have gotten into debt with rent, with bills.”

Crisostomo’s former employer, Golden Gate Restaurant Group Inc., was found liable for a total of nearly $2 million for failing to pay more than 230 of its employees minimum wage, overtime or meal and rest breaks at several of the Burger King restaurants it operated in the city.

None of the wronged employees has collected a cent from that citation, because — 19 months later — the state Labor Commissioner’s Office has not yet scheduled a hearing on the company’s appeal, said attorneys representing workers. Until that happens, the case cannot move forward, unless the employer chooses to settle.

“It’s so unfair that the state is not trying to speed this up,” said Crisostomo, an immigrant from El Salvador, speaking in Spanish. “They should be more strict with this type of employer and pressure them to follow the law. If it’s true that workers have rights, the state should enforce them.”

Neither Monu Singh, Golden Gate Restaurant Group’s CEO and president, nor Sanjay Ahuja, its secretary at the time of the investigation, returned KQED’s requests for comment.

Meanwhile, the company has taken advantage of the delay to shield its assets, which doesn’t bode well for the cheated employees, said Alexx Campbell, who is representing workers in the case.

“The company that did this to them has been starting to move assets around and to shut down restaurants in San Francisco and is potentially making moves to avoid payment altogether,” said Campbell, an attorney with the nonprofit group Legal Aid at Work.

The Labor Commissioner’s Office declined several interview requests, and would not comment on hearing delays for this case or others investigated by its Bureau of Field Enforcement (BOFE), the branch of the agency that handles pay violations affecting multiple employees at a single company.

However, in 2019, agency officials acknowledged that delays were hurting workers. They said changes in the law had given them new tools to combat wage theft but made the process take longer. And they asked the Legislature for a budget increase to hire more staff for its Wage Claim Adjudication (WCA) unit, whose officers generally handle appeals of both big BOFE citations and wage claims brought by individual workers — the latter of which totaled more than 32,000 in 2018. WCA may also refer more complex BOFE cases to the Labor Commissioner’s legal unit for an attorney to act as a hearing officer. 

In the budget request, officials wrote that, by law, those individual hearings are supposed to take place within 120 days of the date of the complaint. But the average wait time for individuals was nearly 400 days in 2018, and administrators projected that it would grow to 572 days — 19 months — by 2020.

“With the WCA drowning in stale wage claims awaiting hearing, all the while receiving more new claims each year, the WCA unit is in desperate need of Deputies and Hearing Officers to address burgeoning processing times and ensure cheated workers are receiving justice in a reasonable amount of time,” wrote Carlos Torres, assistant chief of the WCA unit.

After the pandemic hit, the backlog got significantly worse, as the agency temporarily halted in-person proceedings and struggled to conduct business remotely, advocates said.

KQED tracked several large cases that have languished without a hearing, including:

• A $4.5 million citation against Cheesecake Factory Restaurants Inc. and contractors in San Diego and Orange counties for underpaying 559 janitorial workers. The fines were issued in June 2018, but 3 1/2 years later, a hearing has not yet been held, according to the Maintenance Cooperation Trust Fund, a janitorial industry watchdog group.
• A $12 million citation against RDV Construction Inc. in the Los Angeles area for withholding wages from more than a 1,000 workers. The fines were issued in February 2019, but no hearing has yet occurred nearly three years later, according to the Carpenters/Contractors Cooperation Committee, a group that helped tip the state to the violations.

These cases represent just a few of the 6,831 violations BOFE cited in fiscal years 2017-2019, according to its enforcement reports to the Legislature. The proposed fines totaled more than $228 million, but only about 12% of that amount was collected in those years.

As cases drag on, businesses can close or go bankrupt, while witnesses move away or give up on the case, complicating efforts to get restitution for workers, said Patrick Mulligan, who directs San Francisco’s Office of Labor Standards Enforcement.

Mulligan’s office cited Golden Gate Restaurant Group, the Burger King franchisee, after its own investigation found the company violated a city health care ordinance. The company settled in September 2020, agreeing to pay employees more than $803,000 over the course of 10 years, of which about $150,000 has been collected, he said.

Noting the long payment plan, Mulligan acknowledged the agreement was not “everything the workers deserved,” but said at least it’s money they can put in their pockets.

“For us, ultimately, our goal of establishing a strong atmosphere of labor enforcement means timely and responsive enforcement actions,” he said. “And then on the other side, it limits the amount of hardship for workers if the matter gets resolved as expeditiously as possible.”

Torres, at the state Labor Commissioner’s WCA unit, recognized that delays give unscrupulous employers an “increased opportunity to further evade the responsibility of unpaid wages.”

“Low-wage workers may be in situations where they are forced to give up in the process … that may result in a paper judgment that leaves little promise of collectability after so much time has passed by,” wrote Torres in his 2019 budget request for more staffers.

The unit, which was initially established to give workers a no-cost, quick alternative to suing an employer in state court, has just 64 hearing officer positions, according to state Department of Finance records.

“They have way more cases than one person should be assigned,” said Renee Amador, legal director with the Maintenance Cooperation Trust Fund. “We have the Labor Commissioner’s Office who is passionate about enforcing the law. But if they don’t have the people that can do so, they’re [only] going to be able to do so much.”

In 2020, the Legislature approved funding to increase the unit by 63 positions, including 14 new hearing officers, by mid-2024. And the agency has since hired more staff. But it’s unclear whether that has resulted in shorter processing times.

Sen. Cortese said the agency remains inefficient, and plans to hold committee hearings on the delays in coming months.

“This has been the case over the years at the Labor Commissioner’s. This is not a new problem,” Cortese said. “And that usually means the entire culture of the operation needs to be addressed and revisited and restructured.”

This post has been updated to reflect a potential additional step in the Labor Commissioner’s processing of large wage-theft cases.