Hey there, I just filed a wage claim in San Jose, and I was wondering if anybody might have any idea of what I can expect in the next few months. Here's my story:

I worked for Company X as a full-time salaried employee for almost 3 weeks before Company Y made me an offer I couldn't turn down. I accepted the offer from Company Y and told Company X that I'd be happy to serve out whatever notice period they wanted, but unsurprisingly, they informed me (over the phone) that there was no need for me to server out my notice. After all, I had really just started -- so it didn't make any sense to keep me on any longer.

Company X had already sent me (via USPS mail) my one and only paycheck BEFORE I resigned, and I received the paycheck on the day of my resignation. The check was for ~$4,000 minus taxes. After I resigned, the company decided to get back at me by quietly stopping payment on my paycheck, which I learned when my bank sent me the original check, stamped 'STOPPED PAYMENT'. When I called the company to ask about this, my only contact at the company informed me that due to a clause in my contract, I actually owed them a total of ~$6,500, and that they weren't going to go after me for the $6,500 but that they were content with simply confiscating my wages. They said I should consider myself lucky. My contract states that if I leave the company without giving 30 days notice, I owe the company for lost wages (they're a consulting company, and they were making lots of money off of me). The contract does NOT, however, state that they can take this money out of my wages.

Firstly, out of curiosity, does anybody have an idea as to whether or not this type of clause is enforceable in California? (...aside from the fact that it's basically de-facto impossible to collect without some kind of stunt like this.)

In any case, irrespective of the validity of their claim against me, it is my understanding that their actions (stopping payment on my lawfully-earned wages) are illegal under California labor law. In other words, even if I do owe them the $6,500, they cannot legally extract payment from me by withholding my pay.

...and it seems that the DLSE agrees thus far. I filed my claim last week, including copies of my paystub, the stopped paycheck, signed time sheets, and my employment contract. According to the DLSE deputy who looked at my claim, I am owed my original wages (~$4,000), plus the waiting time penalty for 30 days (~$10,500 -- it's been over a month since the original paycheck was issued), plus an 'insufficient funds' penalty because they stopped payment on the check (another ~$10,500). The total claim is ~$25,000, and the DLSE deputy said that both the company and I would be receiving letters describing the legal basis for claim within 7 days, scheduling a conference for the end of January (about 45 days from when I filed). I was quite impressed with the DLSE's timeline and the attitude of the deputy who looked at my claim -- with confidence, she said "We'll get you your money."

I expect my letter from the DLSE scheduling the conference within the next few days, but I'm wondering a few things:

How optimistic should I be that I will be able to get all (if any) of my waiting time and insufficient funds penalties?

What kind of mechanisms do does the DLSE have for enforcing payment (of any) if the process goes to a hearing and I am victorious?

If the conference doesn't yield the results I'm looking for (ie. if the company refuses to pay), should I immediately seek out legal representation to prepare to file my case in civil court, or should I patiently work through the DLSE process as long as I can?

My gut tells me that the company will not want to get involved in hearings, law suits, etc. and that if they act rationally, they will offer to settle with me for the original wages that are owed to me, but I want to make sure that they see that it is in their best interest to settle as quickly as possible. The legal fees they might incur in defending themselves in a hearing and a trial, not to mention the damage done to their reputation and to their relationship with their clients should ensure that they deal with this quickly, but people don't always act rationally. From my perspective, considering that this claim might be worth $25K, I'm willing to invest some time...

Lastly, Section 216 of the California Labor Code indicates that anyone at a company responsible for denying someone his wages is guilty of a misdemeanor. Section 225.5(b) lays out the penalties for this misdemeanor. If I am successful in my wage claim, can I go after the individuals responsible for trying to rip me off?

I have no idea if you will win, but if you did, you should be very optimistic about the waiting time and penalties. That is why they exist. Government agencies take this kind of thing seriously.

DLSE is not someone to mess around with. I doubt that your ex-employer is going to want it to get to the "enforcement" point. If you win, the favorable decision is entered as if it were a judgment in a lawsuit. An attorney could better help you with judgment collection options. I believe that the DLSE can help collect as well.

Your company not paying is not the worry. If you win, they will likely pay. Non-payment = more penalties and more money. If there are assets to attach to, the eventual judgment would allow you to get your award.

DLSE is probably not interested in pursuing criminal charges. Not sure how much luck you will have convincing a DA to go after them either. You can try if you want.

www.dir.ca.gov/dlse/dlse.html for more information.

In terms of a contract that requires 30 days notice, this will be enforced in California. First, it is not clear that any such enforceable contract existed or whether it was simply an understanding or agreement that was not intended to be be enforced in court. Even assuming there was such a contract, based on the facts you presented, they waived this requirement when they told you that there was no need for you to continue working. Obviously though, if they counter-sue you for this money, you should retain legal counsel.

I think the rest of your legal analysis is correct. However, the employer will likely appeal any decision from the labor commission, so frequently, the entire process is a waste of time because it ends up in court anyway. It also gives the employer two chances to win. If they win at the labor board, then the case is over as you will likely not appeal the decision (costs too much). If they loose at the labor board, they can just try a different tactic in court and see if that helps. Courts routinely throw out labor board decisions, so a win at the labor board will not influence the court in any way.

Finally, a hearing officer or deputy labor commissioner should never say "We'll get you your money." It is patently unfair to have decided a case without hearing the other side. You may be right, and you may be entitled to your money, but that is what the hearing is to decide. Early statements such as this are likely to get the deputy in trouble.

Thanks for reading and responding to my post. It is so valuable to have some informed opinion as I enter this process.

However, the employer will likely appeal any decision from the labor commission, so frequently, the entire process is a waste of time because it ends up in court anyway. It also gives the employer two chances to win. If they win at the labor board, then the case is over as you will likely not appeal the decision (costs too much). If they loose at the labor board, they can just try a different tactic in court and see if that helps. Courts routinely throw out labor board decisions, so a win at the labor board will not influence the court in any way.

This is an interesting analysis, but it doesn't fully make sense to me -- please let me know where I'm wrong:

Given what I see as the strength of my case, if they're rational, they will try to avoid a protracted battle (conference, hearing, civil proceedings, appeals, etc.). Considering that they originally owed me $4k and might face penalties of another $21k, I can't see why they wouldn't want to try to negotiate a settlement as quickly as possible. The legal fees that they would incur, plus the amount of time they would have to invest to fight me will quickly surpass the original amount owed and eventually might exceed the total $25k.

Conversely, it appears that aside from an investment of my time, I have almost nothing to lose by pursuing this claim as far as I can go. They already took all of the money I was owed, and even if they tried to sue me for the remainder of the $6500 (none of which I believe I owe), it would hardly make sense to expend the time, effort, and money required to get me to pay the $2500. For my part, I don't need to retain counsel for the conference or hearing, and if I successfully win a judgement in the DLSE and the employer appeals, it is my understanding that most attorneys would represent me on a contingency basis -- I'd be happy to give up 30% of a $25K judgement when I was only owed $4k to begin with.

In summary, it looks like I have almost nothing to lose by pursuing this to the end, and that they have every reason to fold as quickly as possible. (Again, this analysis assumes that my case is strong and that we're dealing with rational actors.) Am I wrong here?

Another thought...

In terms of a contract that requires 30 days notice, this will be enforced in California. First, it is not clear that any such enforceable contract existed or whether it was simply an understanding or agreement that was not intended to be be enforced in court. Even assuming there was such a contract, based on the facts you presented, they waived this requirement when they told you that there was no need for you to continue working.

Unfortunately, I never got it in writing from them that I was released from this part of my contract. On its face, to an outside observer, it would make sense that they would no longer want to employ me as a consultant considering I had really just started working for them and had already decided I didn't want to work there any longer -- and this was, indeed, the case. If, however, they did try to pursue this claim in court, would I have any chance at persuading a judge that they waived the 30-day requirement verbally, or is that just a non-starter?

First, I want to point out the I generally represent employees in lawsuits against the employer (though occasionally, I do represent an employer). So, I really hope you get your $25,000, or whatever is due you. The following is just a realistic analysis of the law:

There is no automatic penalty for a "stop payment" check. The labor code specifically states that the penalty is when a check is "refused payment because the employer or maker has no account with the bank, institution, or person on which the instrument is drawn, or has insufficient funds in the account upon which the instrument is drawn at the time of its presentation" Thus, the law provides for only two scenarios when penalties are appropriate: when the employer has no account at the bank (a closed account) and when there are insufficient funds. The law does not specifically say anything about a stop-payment. Their employer would argue that a stop-payment is very different from an insufficient funds and that the employer had a dispute with you over the money and issued a stop payment. You would argue that the two are the same thing and that the law was designed to protect against all types of checks that could not be cashed. Both good arguments, but I don't see a "slam dunk" on either side. I don't even see one side as being significantly stronger than the other. I would have to call this one at 50/50.

There is no automatic "waiting time penalty" under Section 203. In order to get the waiting time penalties, the violation must be willful. A violation will not be willful if any mistake of law or fact, even if not successful, would eliminate the need to pay any wages. The employer will argue that they were mistaken and thought they could withhold the wages for money that you owed them. If the judge buys it, then you don't get any penalties. In pure legal arguments, this one is not that good for the employer.

Judges are not computers. They don't simply take inputs and produce outputs. Given the fact that you only worked there a couple of weeks, I am not too sure that a judge would find it "willful" and award you $10,500. This just might not seem fair to the judge. In addition, you don't come off as a victim in this case. You signed up for a job and then left it after a couple of weeks. Clearly, you were due your wages, but there is going to be some sympathy for the employer from either a judge or a jury. So, while it doesn't play into the legal analysis, this is just the way people are -- even judges.

Finally, the problems with the breach of contract and waiver are far more involved than I can discuss here. You should consult with an attorney on this matter (my firm can not represent you in this, so this isn't me looking for a case). The bottom line is that if the jury doesn't believe your story, you could be on the hook to the employer for a large amount of money.

Employees need to take their employment contracts seriously. If you contract to work for 1 year, to give 30 days notice, or anything else, these terms will be enforced just like any other contract. If the contract is illegal or unconscionable, then it will not, but there is no blanket law that all employment contracts will not be enforced.

What you need to do is consult with an attorney as what you really need is legal advice specific to your particular case. This forum is not really approraite for any detailed discussion.

First, I want to point out the I generally represent employees in lawsuits against the employer (though occasionally, I do represent an employer). So, I really hope you get your $25,000, or whatever is due you.

Michael,

Thanks for taking the time to provide some analysis of my issues. Despite not being a lawyer myself, I came to basically the same conclusions that you have regarding the legal validity of my claim and my chances of prevailing in court. I wasn't overly optimistic about the insufficient funds claim, having read the law you quoted, but the DLSE officer seemed fairly confident. I also figured that having to prove a willful violation might also work against me. What seems to mitigate both of these issues, however, is that from what I've read, the California courts tend to interpret labor law liberally in favor of the employee when there is any abiguity.

Indeed, a former lawyer I know has a rule he calls the 60/40 rule: In the American legal system, if you have a slam dunk case, you've got a 60% chance of winning. If you have no case, you still have about a 40% chance of winning. Of course, he might be a bit jaded...

So we're agreed that my chances of prevailing in a civil proceeding are good (certainly with regards to my original $4k), but that there's no guarantee that I'll get any of the penalties that the DLSE seems to think are due to me.

What I'm really driving at is this: Once the employer gets the letter from the DLSE to schedule a conference, won't it be in their best interest to try to negotiate a settlement with me? Won't any good attorney recommend to them that they get rid of this problem as quickly as possible? It seems to me that at the very least, any good attorney will tell them that stopping payment on my paycheck was illegal, and that it will cost them tons of money to fight this in the DLSE and in court. This company is in the business of making money -- and expending huge amounts of time, money, and emotion into a case where what they clearly did was illegal simply wouldn't make sense. Moreover, if their client (where I worked as a consultant for the company) were to get dragged into the legal battle, the company's account with the client could be irrevocably damaged -- potentially costing them hundreds of thousands dollars worth of business. Wouldn't that be reason enough try to settle as quickly as possible?

Perhaps my questions require more supernatural divination than actual legal advice, but that's why I'm posting here. :) I'm curious to know what others have experienced in situations similar to mine.

thread hijack.............Hey, Michael, glad to have you back! REALLY!!!!! :D

That is so weird it just happened to me. I worked for a medical tech compnay located in Redwood City CA and they did the same thing. I gave notice and they stopped the paycheck that I ultimately received the same day but was basically worhtless as they stopped payment when I gave my notice. There is also a statute Section 216 that provides for employers themselves to get a misdemeanor conviction for pulling that stuff.

The big thing with me is that that I am located in PA so they think they can get away with that garbage. I amo going to go for the conviction even if I cant get the money back. It is time that employers take personal responsibility for their comapny's actions.

If anyone has any advice or suggestions please let me know. I have talked to a couple of attorneys so far but have not retained one yet.

bill

www.medpracticeflow.com

That is so weird it just happened to me. I worked for a medical tech compnay located in Redwood City CA and they did the same thing. I gave notice and they stopped the paycheck that I ultimately received the same day but was basically worhtless as they stopped payment when I gave my notice. There is also a statute Section 216 that provides for employers themselves to get a misdemeanor conviction for pulling that stuff.

The big thing with me is that that I am located in PA so they think they can get away with that garbage. I amo going to go for the conviction even if I cant get the money back. It is time that employers take personal responsibility for their comapny's actions.

Bill,

I'll definitely keep you posted here on my progress -- our situations sound similar, indeed. I also saw the misdemeanor business in Secion 216 of the labor code, and I relish the idea of making the responsible individuals pay for their mistakes. My understanding is that the misdemeanor carries a penalty of $200, plus 25% of the amount of the denied wages, payable by the responsible individual to the ripped-off employee -- though a good chunk of the money goes to some state fund. I'm curious to know how I might be able to collect these funds, myself...

In any case, I'm guessing that you might be able to do some of your wage claim from PA -- I'm not entirely sure if you have to be physically present for the conference or hearing, but you can at least start the process by . I'd suggest calling the DLSE and explaining your situation -- they were quite helpful when I filed my claim.

I called the DLSE today and someone told me that I must have worked physically in CA to be able to file against a CA company. I am going to look into that but it seems unfair that the state that regulates the companies in their state can't go after them.

Has anyone outside of CA experienced the same requirement?
bill

It is standard in all 50 states for the laws of the state where you physically worked to be the applicable ones. Where the company is headquartered makes no difference.

You are free to file a claim with the PA DLI and see what they say.