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On April 25, 2023, the California Labor Commissioner’s Office announced a settlement of $1.47 million for wage theft claims against three “client employers” and their owner for underpaying more than 300 workers. “Client employers” are companies that obtain workers through labor contractors or employment agencies. Under California law, client employers may not shift their legal duties or liability to labor contractors just because the workers are supplied by that labor contractor.  

In this instance, the affected workers were paid a piece rate to process chicken, and some workers made less than minimum wage. Where employers fail to pay minimum wage, California Labor Code section 1194.2 entitles workers to liquidated damages in the amount underpaid, plus interest. Additionally, in this case, workers were not provided paid rest breaks, not properly paid overtime, and not compensated for “nonproductive time” – time when they were required to be at work waiting for chicken to arrive or be removed from the processing area.  

The Labor Commissioner’s Bureau of Field Enforcement (BOFE) began investigating wage violations in 2017 after a worker filed a complaint, resulting in $1.5 million in citations. The client employers appealed the fines, which were upheld in a 2021 hearing with the Labor Commissioner, ultimately resulting in a settlement of $1.47 million.  

Employers that use labor contractors in California are jointly liable for any labor law violations, and this settlement is a good reminder for employers to ensure that they are using reputable labor contractors that observe all California laws. As stated by Labor Commissioner Lilia García-Brower, “this result also upholds the liability of client employers, who in this case built a business around low-paid processing workers and tried to hide behind undercapitalized labor contractors.”   

Employers Council’s California Legal Services Team is available to assist employers with matters related to their California workers to ensure that they are in compliance with the state’s myriad employment laws. Please contact us at CAinfo@employerscouncil.org.