'A Deep, Systemic Problem': Persistent Backlogs Force State Audit of California Labor Commissioner's Office

California’s independent state auditor will investigate the understaffed California Labor Commissioner’s Office over its persistent backlogs in workers’ wage theft claims, issues highlighted in a series of articles last year by CalMatters.

The audit would start Sept. 1 — that is, if budget hearings before then don’t address the agency’s problems to the satisfaction of lawmakers who approved the investigation.

The Joint Legislative Audit Committee on Wednesday called for the audit over the objections of some of the state’s biggest labor unions, who argued the probe was unnecessary.

Labor Commissioner Lilia García-Brower on Wednesday also pushed back against an audit, testifying that her office already is undertaking multiple reforms to address her agency’s backlogs.

The Labor Commissioner’s Office has struggled for years to address wage claims in a timely manner. Wage theft — the failure of employers to pay the minimum wage, pay overtime premiums, or provide meal and rest breaks — primarily affects low-wage workers, who are often immigrants or people of color, studies show.

Each worker’s claims by law are supposed to be heard in 120 days and decided 15 days after that. But CalMatters, in its series, uncovered that between 2017 and 2021, the state averaged 505 days.

After that, back pay can take years to recover, and many who win their claims are never paid. The backlog was exacerbated last year, when new wage theft claims hit a record 38,000 and wait times climbed past 800 days (PDF).

“What is it going to take to get to 120 days? Is it additional measures to compel employers to participate, and if that’s the case, in which ways?” asked Assemblymember David Alvarez, a Democrat from Chula Vista who chairs the legislative audit committee.

“I am willing to give an opportunity for those questions to be answered,” he said. “But I’d like to see detailed answers, not just, ‘We’re going to do better when we hire more people.’”

Alvarez held out the possibility that the committee could rescind their audit request before September if budget hearings satisfactorily address the issues the audit would target. The Labor Commissioner’s Office is seeking $12 million in the next fiscal year to hire 43 additional employees with the goal of reducing the time to hear a claim to 200 days.

The audit came at the request of state Sen. Steve Glazer, a Walnut Creek Democrat, who agreed to the compromise to delay the audit until Sept. 1. The audit request put Glazer, a moderate Democrat, at odds with labor groups and workers’ advocates.

The California Labor Federation and several unions and worker centers wrote earlier in March that an audit would divert time and attention from an already understaffed agency.

The California Chamber of Commerce testified in favor of the audit. Ashley Hoffman, a lobbyist for the chamber, told the committee it is important to the state’s employers that bad actors be held to account and that disputes be resolved expediently, out of court.

In addition to wage claims, California workers can also file lawsuits against employers through California’s Private Attorneys General Act (PAGA), a 19-year-old law that gives workers the same powers as the state to sue employers and recover civil penalties on behalf of co-workers. If they win, the workers can get a quarter of the penalties while the rest goes to the state for labor enforcement.

In 2022 the Department of Industrial Relations, the agency that houses the Labor Commissioner’s Office, received 5,813 notices of new PAGA suits, according to state data.

The chamber is among several business groups that succeeded in getting a measure to repeal the private enforcement law on the 2024 ballot.

Hoffman told the committee that workers get more of their back wages when they go through the Labor Commissioner’s process instead of filing a lawsuit with a private attorney.

In her testimony Wednesday, García-Brower said she is working to overhaul her office’s wage claims staff by recruiting recent graduates from the University of California, filling key managerial positions and implementing new pilot initiatives in certain offices, among other measures.

García-Brower, an appointee of Gov. Gavin Newsom, is the former director of a group that helped the state investigate wage theft in the janitorial industry before she became labor commissioner and is considered an ally of the unions and worker advocates who opposed the audit.

The labor and worker groups advocated instead for increased funding for García-Brower’s office, higher penalties for employers who violate labor law and an expedited hiring process for the Department of Industrial Relations. They also argued for boosting the use of criminal charges against problem employers and expanding local officials’ abilities to sue businesses on behalf of workers to relieve pressure on the state.

Lorena Gonzalez Fletcher, the former Assembly member who heads the California Labor Federation, told CalMatters in an interview before the hearing that an audit would be a distraction.

“Everyone knows there’s a problem, including the labor commissioner,” Gonzalez Fletcher said. “I don’t think an audit is going to tell us anything we don’t know already.”

But at the hearing, García-Brower conceded that the issues in her office went beyond a staffing shortage.

Assemblymember Jim Wood, a Democrat from Ukiah and a member of the legislative audit committee, said his office had considered proposing an audit of the labor commissioner’s wage claim issues.

He told García-Brower that his office struggled to get data on wage claims from her office, and that some of his constituents had faced people who worked for her who “are not always terribly friendly and very dismissive sometimes.” That prompted García-Brower to agree.

“I sat across six different labor commissioners, and most of them were dismissive,” García-Brower said, referring to her time as a labor activist. “So this is a deep, systemic problem within the culture of this agency, which is why we’re digging down deep to ensure that people understand we are a public-facing agency. We were created to serve the public.”

Senator John Laird, a Democrat from Salinas who sits on the committee, said García-Brower’s acknowledgement that the office’s problems went beyond staffing issues swayed him in favor of the audit.