Oct 18 2007
Why Does Everyone Diss the DLSE?
I was preparing to explore the theorizing that I and other bloggers did in the wake of Genrty that it would have implications for employment contracts in general, when I came across this footnote in the recent Murphy v. Check ‘N Go case. “Plaintiff requests judicial notice of information on the process for bringing claims before the Labor Commissioner, which is offered to show that this process ‘does not provide the same protections for the employee and is not an adequate substitute for a court proceeding. . . .’” (Slip. Op. at 9-10 n.1)
I’ve noticed a few times where this has come up. Here, it was a submission by Plaintiff/Appellee. The California Supreme Court did it in Gentry, the Court of Appeal did it in Sumuel v. ADVO, Inc. The Court’s have also declined to give any weight to the DLSE’s opinion letters, and disavowed the notion that the DLSE could issue precedent opinions.
A couple of years ago, the Legislature passed a bill (which was vetoed) that would have required the employer to show up at the DLSE hearing instead of skipping them and waiting for their day in court (AB 879 of 2005.) I was told by a spokesman for the bill’s author that this was to prevent employees from “spinning their wheels” with the Labor Commissioner.
Now, employers generally hate the DLSE and the entire Berman hearing process. The so-called de novo review has been rendered almost useless for employers because in order to avoid paying the employee’s attorney’s fees, you must negate all of their recovery. But, the DLSE is, on its face, an even cheaper and more streamlined way to resolve wage hour disputes than the arbitrations many businesses are spending major coin to uphold. There are no class actions. There are no punitive damages. There is almost no discovery. Lawyers aren’t required. The rules of evidence are very liberal.
On the other side, employees don’t need a lawyer, get help from the staff, and generally get their money in a matter of weeks, not months or years. The notion that small recoveries don’t work there are ridiculous. I’ve been sent to defend claims of around $100! The employee only lost a few hours of paid time off. On top of that, the waiting time penalties almost always make it a gainful proposition for the employee, who does not end up giving a huge chunk to an attorney. And guess what? They have really smart, experience, and knowledegable attorneys like Bill Reich who will represent you for free if there’s an appeal.
Yet, no one wants to go there. No one wants it to do anything or have anything to do with it. Is this simple interest group stuff and/or turf battle stuff? (It’s unfair for employer-side attorneys, not cost effective for their clients, cuts into plaintiff’s attorney’s “market share,” and does a judicial function that the courts think/know they’re the best at) Is that too cynical? or too naive? I’m not sure.
One of the contentions is they can’t handle the extra load. Last I checked, the courts were bursting at the seems themselves. It seems to me that given the choice, funding the DLSE to handle a higher load is cheaper than doing the same in the courts. But if we fund up the courts, then are we paying for the DLSE for?
Please leave comments or send me an e-mail if you have any thoughts about this. I am genuinely confused.
I have mixed feelings about the Labor Commissioner. I have been representing employees and employers at the Labor Commissioner since I was in law school and tend to get some very inconsistent results. At my very first hearing the hearing officer required me to admit the IWC Order into evidence. I was only a second-year law student but I knew I shouldn’t have to admit the law into evidence. I was tempted to ask the hearing officer if I should also admit the Labor Code while we were at it.
I once had two clients with virtually identical claims against the same employer. The hearings occurred on two different dates and I received opposite results. I would have chocked this up to different hearing officers reaching different results based on the credibility of the witnesses, but I had the same hearing officer in both cases and I couldn’t see how one claimant was any more credible than the other.
Ten years ago I could get through the Labor Commissioner process (complaint to hearing and decision) within 6 to 9 months at the most. Our local office now takes over a year. While the informal conferences occur fairly quickly (1 to 2 months after filing), it takes 4 to 6 months to get a hearing date. Even after the hearing, it takes 3 to 4 months to get the decision. If no one appeals the decision, it takes another 2 to 3 months to get the Order turned into a judgment. It is my understanding that the vast majority of the delays results from the clerical staff because they are understaffed.
I can usually get to trial and get a judgment in a Limited Jurisdiction case faster than that.
Another problem is that (at least at our local Labor Commissioner office), any case that is worth more than $35,000.00 is reviewed by the senior deputy after the informal conference. If the case is too complex or if the parties are represented by counsel, the case will be dismissed requiring the claimant to file in court anyway.
My biggest pet peeve with the Labor Commissioner is its incessant attempts to create law without the authority to do so. The Labor Commissioner has made repeated attempts to create regulations. For example, with regard to meal breaks the Labor Commissioner spent time and money trying to adopt regulations despite the fact that the Labor Commissioner is now empowered to adopt regulations. When that failed, it decided to implement “precedent decisions” as an end-run around its inability to promulgate regulations and an attempt to avoid the Administrative Procedures Act. The Labor Commissioner still does not understand that the legislature empowered the Industrial Welfare Commission, not the Division of Labor Standards Enforcement, to promulgate regulations as evidenced by the Labor Commissioner’s latest attempts to create regulations regarding expenses under Labor Code Section 2802.
For all its problems, however, I think the Labor Commissioner is an excellent route for employees and something too many employers ignore. From the employer perspective, the Labor Commissioner process offers the employer a low-cost way to resolve the claims. It also defeats the threat of attorneys’ fees which is often the biggest concern in a wage and hours case. Additionally, any plaintiff’s attorney worth their salt realizes that they can double the value of their client’s claims in court by adding causes of action that are not available at the Labor Commissioner. Therefore, it is in the employer’s interests to try to resolve claims while the matters are still before the Labor Commissioner to avoid significantly greater exposure.
Of course, that’s just my opinion. I could be wrong.
(*BTW, Excellent Blog! Keep up the good work!)
You might want to check out a new blog, “California’s Division of Labor Standards Enforcement has no labor standards of their own!” It is at http://nolaborstandards.blogspot.com/. Apparently written by insiders at DLSE, it is snarky but apparently tracks real abuses of power (or what appear to the blogger to be abuses, in any event).
I have only skimmed it, but let’s just say no one’s respect for the DLSE is likely to increase from reading it.
Greg
True story:
I represented an employee whose employer simply stopped paying him for about a month before he simply quit. He was salaried, but incorrectly classified as exempt, so we had an overtime and minimum wage case.
We went to a hearing on the claims and the employee testified that he went to work at the same time pretty much every day and left about the same time. The employer (represented by their HR rep) disputed this orally, but did not introduce any evidence to support it and did not keep any record of hours worked whatsoever. The hearing went well and I felt pretty good about it afterwards.
Five days later the hearing officer issued an opinion finding in my client’s favor, but awarding him no money at all because we did not introduce any evidence to prove how many hours he worked each day. It should be noted that the employer alleged that the employee worked 8 hours each day (and did not receive any wages at all).
It’s the Wild West over there and the “good guys” don’t always benefit from their quackery.
I am personally aware of many businesses, small, medium, and large, who have been damaged by DLSE.
DLSE’s conduct is not only abusive, but it should be considered UNCONSTITUTIONAL.
What legal process sits OUTSIDE of judicial processes, ignores the legal precedence, and damages Californian’s for tens of millions of dollars per year?
DLSE is a travesty and no amount of $100.00 settlements can equate to the billions in damage that Starbucks, Boeing, Cheesecake Factory, San Diego Children’s Hospital, and more suffer each passing week as this “pro-business” governor continues to permit a state agency to deny fair hearing rights to stockholders and business owners.
This is tantamount to a forced and coerced governmental seizure of assets and private property WITHOUT trial!