California Employers and How to Defend Wage and Hour Claims before the Division of Labor Standards and Enforcement
An employee (plaintiff) alleging the non-payment of wages or other compensation by his or her employer (defendant), must file a claim (the DLSE Form 1, “Initial Report or Claim” form) with a local office of DLSE to initiate investigation of the claim by the Labor Commissioner. The employee is asked to provide any time records the plaintiff kept of the hours and dates worked that support the claim, paychecks and pay stubs showing the wages paid during the claim period and dishonored (or “bounced”) paycheck(s) during the claim period.
However, under California law it is the employer’s legal responsibility to keep accurate employee time and payroll records, and to provide employees with itemized wage statements each time they are paid (or at least semimonthly). In order to file a claim, employees are not required to keep their own time records or to have the documents above.
After the claim is reviewed by a Deputy Labor Commissioner (deputy), he or she will determine, based on the circumstances of the claim, how best to proceed. Within thirty (30) days of the filing of the complaint, the deputy shall notify the parties as to the specific action which will initially be taken regarding the claim. The possible actions include referral to a conference, referral to a hearing or dismissal of the claim. In Southern California the vast majority of claims are sent to an informal conference first.
If a conference is held, the conference is supposed to be conducted informally and the parties are not supposed to be put under oath. This is not always the case. In many cases the deputy will conduct the conference as if it is a mini hearing. Many employers make the mistake of believing that the conference is informal and they don’t need an attorney. The truth is that in most instances if an employer begins to explain “informally” their position the deputy will expect the employer to know the labor laws and be able to explain how the laws do or do not apply to them.
The purpose of the conference is to determine if the claim can be resolved without a hearing. Plaintiffs (employees) are not required to prove their case at the conference. The parties should be prepared to talk with the deputy about the claim, including whether there are any witnesses. However, the parties do not need to bring witnesses to the conference. It is imperative that the employer bring any documents that support their position to the conference. If the defendant employer makes payment of the claim, or any part of the claim, directly to the plaintiff, the plaintiff must notify the deputy. If the payment satisfies the claim in full, the case will be closed.
If the conference does not resolve the matter a hearing is set. The parties will receive, either by mail or by personal service, a Notice of Hearing which will set the date, time and place of the hearing. Although hearings are conducted in an informal setting, they are formal proceedings, as opposed to the conference. At the hearing the parties and witnesses testify under oath, and the proceedings are recorded.
Each party has the following basic rights at the hearing:
1. To be represented by an attorney or other party of his or her choosing.
2. To present evidence.
3. To testify in his or her own behalf.
4. To have his or her own witnesses testify.
5. To cross-examine the opposing party and witnesses.
6. To explain evidence offered in support of his or her position and to rebut evidence offered in opposition.
7. To have a translator present, if necessary.
The hearing officer has sole authority and discretion for the conduct of the hearing and may:
1. Explain the issues and the meaning of terms not understood by the parties.
2. Set forth the order in which persons will testify, cross-examine and give rebuttal.
3. Assist parties in the cross-examination of the opposing party and witnesses.
4. Question parties and witnesses to obtain necessary facts.
5. Accept and consider testimony and documents offered by the parties or witnesses.
6. Take official notice of well-established matters of common knowledge and/or public records.
7. Ascertain whether there are stipulations by the parties that may be entered into the record.
An employer who intends to introduce business records into evidence must bring a person to the hearing who can explain how such records were prepared and be prepared to testify that the records are accurate and were prepared in the regular course of business. If available, the originals of all documents should be brought to the hearing plus two sets of copies.
The hearing officer is not bound by formal rules of evidence and therefore, has wide discretion in accepting evidence. He or she also has discretion in deciding whether the assessment of penalties is appropriate in a particular case. This is important. Most employers who appear without counsel at these hearing are shocked by the amount of the penalties that can be assessed against the employer and don’t understand what the employer needs to establish to avoid certain penalties.
Within fifteen (15) days after the hearing, the Order, Decision or Award (ODA) of the Labor Commissioner will be filed in the DLSE office and served on the parties shortly thereafter. The ODA will set forth the decision and the amount awarded, if any, by the hearing officer.
Either party, or both, pursuant to Labor Code Section 98.2, may appeal the Labor Commissioner's ODA to the superior court. The party appealing may obtain a Notice of Appeal (DLSE 537) from the DLSE office. The appeal must be filed in court within the time period set forth on the ODA, and a copy of the Notice of Appeal must be served on the Labor Commissioner and the opposing party. Whenever the defendant employer files an appeal, a bond in the amount of the ODA must be posted with the reviewing court. The court clerk will then set the matter for de novo hearing, which means that a judge will hear the case again with each party having the opportunity to present evidence and witnesses.
In the case of an appeal by a defendant employer, DLSE may represent a plaintiff who is financially unable to afford counsel in the appeal proceedings. The decision to represent the plaintiff is within the sound discretion of DLSE legal staff. The employer, however, must pay for its own attorney. The hearing in the superior court is actually a trial and the rules of evidence apply. Witnesses can be called to testify. These trials can be very expensive for the employer.