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$5 Million Overtime Claim Filed by Labor Commissioner

On December 19, 2007 the California Labor Commissioner filed an action against Excell Cleaning & Building Services, Inc., and MO Restaurant Cleaning of California, Inc., for allegedly failing to pay approximately 300 janitorial workers proper wages and engaging in unfair business practices. The complaint seeks damages exceeding $5 million. The State Attorney General has agreed to join the legal action with the Labor Commissioner.

The legal action resulted from an investigation initiated by the Labor Commissioner in 2006. The investigation purportedly uncovered a failure to provide meal and rest breaks, failure to pay employees all earned wages and overtime to which they were entitled. The investigation also revealed that employees were being misclassified as independent contractors to avoid paying nearly $250,000 in payroll taxes. This misclassification resulted in workers being paid less than minimum wage and not being paid overtime.

The announcement of this litigation followed shortly after the Labor Commissioner issued a press release regarding the distribution of funds from a $2.7 million settlement agreement with Rady Children’s Hospital.

The DLSE has recently increased its enforcement efforts. Employers should review their wage and hour practices to ensure compliance with recent changes to the law.

Phillip J. Griego & Associates
95 South Market Street, Suite 520
San Jose, CA 95113
Tel. 408-293-6341

Original article by Robert E. Nuddleman, former associate of Phillip J. Griego & Associates

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