CA labor law enforcers penalizing the productive

June 4, 2013

By Katy Grimes

cali-390

Looking for a place to start a business? Some are saying anywhere but California.

The California Chamber of Commerce did an analysis of a new report just released by the state Labor Commissioner.

“State of the Division of Labor Standards Enforcement” reveals that California labor law enforcement the past two years has broken previous enforcement records.

“Enforcement efforts in 2011 and 2012 resulted in more minimum and overtime wages found owing to California workers and more monetary penalties for illegal business practices than in any previous years in the past decade,” the Cal Chamber found.

I was a Human Resource Director for 20 years for a manufacturing company of 250 employees at our largest. Increasingly during my HR years, my job required me to try to stay one step ahead of the state’s regulatory labor agencies. And enforcement measures were stepped up every year.

The only good part of this was I worked closely with our managers and trained them to document everything. We rarely lost a labor case. But being constantly hounded by the state’s labor regulators was an real impediment to competitiveness with businesses in other states.

California’s ridiculous regulatory atmosphere and frivolous and insipid labor laws have rendered many of the state’s homegrown businesses non-competitive outside of the state.

Some of the key findings of the report include:

  • Minimum wage – More than $3 million unpaid minimum wages assessed in 2012 – more than any previous year on record, and an increase of 462 percent from minimum wage assessments in 2010.
  • Unpaid overtime – More than $13 million unpaid overtime wages assessed in 2012 – more than any previous year on record, and a 642 percent increase from 2010.
  • Civil penalties – More than $51 million in civil penalties assessed in 2012 against employers for violating labor laws – more than any previous year in a decade, and a 150 percent increase from 2010.
  • Higher Citation Rate – In 2012, the Labor Commissioner’s Office had the highest rate of civil penalty citations (80 percent) in the past decade (compared to an average citation rate of only 48 percent from 2002 to 2010).
  • Industry focus: In 2011 and 2012, the Labor Commissioner’s Office set various records in wage and civil penalty assessments in five major underground economy industries: car wash, restaurant, construction, garment, and agriculture.
  • Public works – More than $25 million in wages assessed and civil penalties issued on public works projects in 2012 – the highest amount since 2002.

“Understanding California’s complex labor laws is no easy task,” the Cal Chamber said.

In my company of 250 employees, I spend nearly 90 percent of my time on just labor law issues, and not because we had labor problems — it was always preemptive.

“State enforcement efforts are on the rise.” And why not? It’s a clever way to extract more money from the most productive in the state. Business owners fear labor enforcers…the same way they fear the IRS.

6 comments

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  1. stolson
    stolson 4 June, 2013, 09:28

    Well, don’t count on rising property values in CA, to offset the dismal labor picture——–a result of CA’s regs…and Unionistas—

    Joe Cusumano, a real estate agent, outside a home in Riverside, Calif. He said much of his business came from large investors.
    The last time the housing market was this hot in Phoenix and Las Vegas, the buyers pushing up prices were mostly small time. Nowadays, they are big time — Wall Street big.

    Large investment firms have spent billions of dollars over the last year buying homes in some of the nation’s most depressed markets. The influx has been so great, and the resulting price gains so big, that ordinary buyers are feeling squeezed out. Some are already wondering if prices will slump anew if the big money stops flowing.

    “The growth is being propelled by institutional money,” said Suzanne Mistretta, an analyst at Fitch Ratings. “The question is how much the change in prices really reflects market demand, rather than one-off market shifts that may not be around in a couple years.”

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  2. Hondo
    Hondo 4 June, 2013, 11:01

    Its time for the Texas guv to make another job stealing trip to the state.
    Kalifornia, the greatest state in the union to be unemployed.
    Hondo…

    Reply this comment
  3. Queeg
    Queeg 4 June, 2013, 16:27

    The key….develop business models that do not require employees….or border your business in a nearby state….ship in your stuff!

    If your a pigeon……become a golden eagle.

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  4. Small Business Owner
    Small Business Owner 5 June, 2013, 09:54

    The state is just trying to get their “fair share”, numerous class action law suits are now the norm and Cali just wants to get a larger slice of the pie. That $ is already going to the shrewd attorney’s (and the employees they represent) that know it’s next to impossible to be 100% compliant. Sure our labor laws are excessive, time and 1/2 overtime after 8 hours, double time after 12 hours, meal periods, 10 minute mandatory breaks during your shift, just to mention a few… None of our neighboring states have to meet these employer requirements and Federal laws are much less stringent. However, why shouldn’t the state go after my competitors that pay straight cash and a straight daily wage, ignoring all labor law requirements ? Those labor laws are already on the books so like it or not legitimate companies are forced to comply. I would like to think the title of this article should be “CA labor law enforcers penalizing the (largest) cheaters,” but that’s just wishful thinking. The companies that are compliant 95% of the time also have much to worry about.
    You’d have to be crazy to start a business in Cali, if one has the opportunity to do business anywhere they should do it ! Or you can put your head in the sand and find out for yourself what you are really up against.
    Hondo, it’s also the greatest state in the union to be employed and know a good attorney. I gotta get back to work now and make sure my secretary doesn’t leave 3 minutes early from her lunch break….

    Reply this comment
  5. Queeg
    Queeg 5 June, 2013, 15:16

    Hondo is a carpetbagger.. Does not live in California….his posts are not useful…..he was never part of a solution for anything.

    Reply this comment
  6. SkippingDog
    SkippingDog 5 June, 2013, 23:07

    Lord knows we wouldn’t want any business to be required to actually pay the wages and overtime for the labor of their employees. I guess Katy is okay with a business stiffing its employees for their work and nobody should do anything about it.

    Reply this comment

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