I am not sure of the cause, but my office has seen an increase in Labor Commissioner claims filed over the last two months. Employers need to prepare and plan on how to defend these claims, and with some planning, the process is a lot less daunting. Here are five effective strategies in defending Labor Commissioner claims:
1. Understanding the claims made by the employee.
Employers usually become aware of a complaint to the Labor Commissioner when they receive a Notice of Claim and Conference from the Labor Commissioner’s office. Employers are not required to file any paperwork in response to the notice of conference, but the employer or an employer’s representative is required to appear at the conference at the date and time indicated on the notice. The conference is not the actual hearing on the matter, rather the conference is structured as a non-binding settlement conference during which the Labor Commissioner discusses the various allegations, the employer’s response, and will attempt to mediate a resolution between the parties.
2. Ensure the claims alleged by the employee can be heard by the Labor Commissioner.
The Labor Commissioner can only hear disputes for “any action to recover wages, penalties, and other demands for compensation.” Labor Code section 98(a). Therefore, the Labor Commissioner cannot adjudicate any other types of employment claims, such as harassment or discrimination. Likewise, if the employer has a counter claim against the employee, it cannot be heard by the Labor Commissioner, but must be filed in court.
Likewise, if the employee has an arbitration agreement with the employer, the employer can compel arbitration of the claim and remove jurisdiction from the Labor Commissioner.
3. Decide if legal representation is required during the Labor Commissioner complaint process.
Neither the employee and the employer are required to have an attorney during any stage of the Labor Commissioner process. Whether or not an employer decides to have legal representation during the process depends on how comfortable the employer is with handling these issues and how well they understand the law in order to articulate the appropriate defenses available to them. Also, many employers attend the settlement conference (discussed below) without legal representation if they are comfortable with the issues, and if the case does not settle and is set for a hearing, then the employer has an attorney assist with the hearing.
4. Understanding strengths and weaknesses of case going in to settlement hearing.
Although it is not mandatory, most Labor Commissioner offices will often set the matter for a settlement conference. Employers often misunderstand the purpose of the initial settlement conference. The settlement conference is not the hearing on the matter in which the Labor Commissioner takes sworn testimony and makes a decision. While this step is not the actual hearing that will determine who should prevail, employers should prepare evidence and documents that will be persuasive during the settlement conference to establish defenses to the employee’s claims. It is also good to listen to the employee’s facts and learn what they are claiming, what evidence they may have, and who may be witnesses. It is important to learn this information in the event that the case does not settle and is set for a formal hearing.
It is important for employers to review the paperwork provided from the Labor Commissioner’s office to ensure that they gather and bring the required paperwork to the settlement conference.
Usually the Labor Commissioner requires the following background information from the employer:
- Completion of the DLSE’s Report of Workers’ Compensation Insurance
- City business license
- Articles of information filed with the Secretary of State
- Any documentation that may be applicable to the employee’s claims: payroll records, time sheets, handbook and applicable policies, correspondence with the employee, etc.…
The employer should also review the employee’s allegations in the notice of claim and prepare an outline of defenses and facts that support their position.
Employers should also understand the arguments in support of their defenses so that those can be articulated to the employee and Labor Commissioner. The more persuasive the employer’s case is, the more likely that the case can be resolved for a nominal amount during the settlement conference.
Employers should be prepared to negotiate during the settlement conference and be prepared with a range of how much they would be willing to settle the case. An experienced employment law attorney can help address the strengths and weaknesses of the claims and can help advise on the appropriate settlement offer, if any, that could be made.
5. Preparing for hearing.
If the case does not settle at the settlement conference, or if there was never a settlement conference set, the Labor Commissioner will set the matter for a hearing pursuant to Labor Code section 98(a). The hearings are often referred to as “Berman” hearings after the name of the legislator who sponsored the bill creating this procedure. The basic idea behind Berman hearings is to provide a relatively fast way to resolve wage disputes. However, with the state budget constraints, the hearings are usually set for about one year from the date that the settlement conference takes place.
The hearing takes place in the Labor Commissioner’s office, and is usually in a conference room. The Labor Commissioner will tape record the hearing, and all witnesses’ testimony is provided under oath, just like it would be if they were testifying in court. The Labor Commissioner can issue subpoenas compelling the attendance of parties at the hearing, as well as compelling parties to produce documents at the hearing.
- Direct examination questions for the employer’s witnesses
- Cross-examination questions for claimant, and potential cross-examination questions for any witnesses that claimant may bring to the hearing
- Prepare key exhibits. Prepare to have documents that support the employers case ready to present at the hearing (generally it is good to have multiple copies of the exhibits so that they can be handed out during the hearing and everyone has a copy to refer to). Handbook policies, meal and rest break policies and acknowledgments, timekeeping policies, and time records are generally the types of exhibits that an employer would rely on in establishing that the employee was permitted to take breaks and was paid for all time worked.
- Prepare witnesses that support defense. Employers can bring in witnesses that support the employer’s defense. For example, evidence can be submitted through managers or supervisors that are able testify to the fact that the employee was always clocked-in when they were working or had the ability to take meal and rest breaks. Also, co-workers who worked with the claimant are also good witnesses to establish that they always saw the claimant take breaks and never saw them working off the clock.
Generally, employers need to be prepared but flexible for how the hearing will proceed. The Labor Commissioner conducting the hearing has a lot of flexibility on how the parties are to present witnesses and conduct cross-examinations. The rules of evidence are not controlling in the proceeding, but the Labor Commissioner generally has discretion to control the evidence presented during the hearing. The Labor Commissioner can, and usually will, ask questions of their own to get a better understanding of certain issues.
After the hearing, the Labor Commissioner will issue a written order that must be served on all parties. Unless this order is appealed, it is a binding judgment against the parties, and a certified copy of the order is filed with the superior court and judgment is entered.