Labor Commissioner Audits

Labor Commissioner Audits Can Be Expensive

Labor Commissioner audits can be time consuming and expensive. Just ask Kome Japanese Seafood & Buffet, Burma Ruby Burmese Cuisine, and Rangoon Ruby Burmese Cuisine. The restaurants and their owners are facing a hefty bill after their audits.

Expensive Labor Commissioner Audits

California’s Department of Industrial Relations announced the Labor Commissioner cited seven Bay Area restaurants more than $10 million for “wage theft violations.” The restaurants included Kome Japanese Seafood & Buffet, Burma Ruby Burmese Cuisine, and Rangoon Ruby Burmese Cuisine.

The Labor Commissioner’s Office launched the investigation after receiving complaints from workers who reported wage theft to the Asian Law Caucus. The Asian Law Caucus also represented many of the workers who cooperated in the investigation.

The wage theft violations and civil penalties cited in the Labor Commissioner Audits include:

  • Failure to pay minimum wage,
  • Overtime
  • Split shift premiums,
  • Illegal counting of tips received as part of the minimum hourly wage,
  • Waiting time penalties, and
  • Pay stub violations.

Many of the overtime violations resulted from employees paid a salary who worked 50 or more hours each week.

Labor Commissioner Audits Include Individual Corporate Owners

The citations are against the corporations and LLCs as well as the owners and members of the companies. Being incorporated does not prevent personal liability for wage theft claims. Labor Code section 558.1 provides:

Any employer or other person acting on behalf of an employer, who violates, or causes to be violated, any provision regulating minimum wages or hours and days of work in any order of the Industrial Welfare Commission, or violates, or causes to be violated, Sections 203, 226, 226.7, 1193.6, 1194, or 2802, may be held liable as the employer for such violation.

Other Labor Code sections also allow the Labor Commissioner to cite individual owners.

David Tai Leung, Wendy Lai Ip, Jun Zheng, Gang Zhou, Bai Dong Zhang and Tiffany Leung, owners of the corporations Kome Japanese Seafood Buffet, Inc. and Koshi Food Service, Inc., are ordered to pay the 133 workers at Kome Buffet $4,381,461 in unpaid wages, premiums and liquidated damages, as well as civil penalties of $780,400.

Max Lee and John Lee, owners of Rangoon Ruby Investment LLC and Burma Ruby Investment LLC, have been ordered to pay their 298 workers $4,394,118 for unpaid wages, premiums, liquidated damages and itemized wage statement violations, and civil penalties of $574,150

The press release did not indicate whether the restaurants will appeal the citations, or how much the Labor Commissioner will actually collect.

I represent employers in Labor Commissioner audits. The audits can be time-consuming and result in serious assessments. Seemingly small mistakes can have serious consequences, and the appeal rights are somewhat limited. Employers receiving notice of an audit should speak with counsel as soon as possible. Properly preparing for an audit can reduce the exposure.

The best way to prevent an audit, or at least make it through an audit unscathed, is to review your policies with a knowledgeable attorney before a problem arises. If you have a question about your wages or employment practices, contact the Nuddleman Law Firm, P.C.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

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