Employers who neglect to pay court-ordered restitution face hefty fines and penalties under both California and federal law.
In a recent California case involving Southern California Cleaning Service, a federal judge ordered the company to pay an additional penalty of $2,400 per day, for each day that the payment is delayed.
Even worse, the court also found the two owners of the company in contempt, and ordered them each to pay an additional $200 per day penalty. Further violations could result in them being jailed for contempt of court.
Both the fines will continue on a daily basis until the employees are paid in full.
In addition, the company was ordered to pay $227,701 in interest – 4.4% — on unpaid back wages of almost $3.5 million, plus $1 million in liquidated damages to workers.
The company’s troubles began in 2007 when the U.S. Department of Labor won a lawsuit against the southern California employer.
The judge in that case determined that Southern California Maid Services and Carpet Cleaning had improperly classified nearly every employee as an independent contractor. The company failed to pay the workers the minimum wage and overtime as required under the federal FLSA, the Fair Labor Standards Act.
“The Department of Labor will not hesitate to take action to ensure workers receive the compensation they have worked hard for and earned,” said new Secretary of Labor Hilda Solis, in one of her first public comments on a case.
Under federal law, when an employer dictates when, where or how an employee performs the job, the worker is an employee, not an independent contractor.
The company’s problems were compounded by the fact that the majority of the underpaid workers spoke only Spanish. This ruling sends a clear warning to employers who try to take advantage of non-English speaking employees.
As bad as this situation was, it could have been even worse for the employers. A California law prohibits independent contractor classification of workers who are engaged in the company’s primary business. For example, a messenger service cannot classify its messengers as independent contractors.
In addition, Southern California Maid Services could face additional charges of illegal discrimination, since almost all of the improperly classified workers were Hispanic.
On August 21, 2007 the employer was ordered by the court to pay nearly $3.5 million in back wages plus $1 million in damages to the employees. In 2009, the U.S. Department of Labor learned that the employer had not paid any of the back wages or overtime, and took the employer to court again.
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