Temecula nail salon cited $1.2 million for misclassification and wage theft of 36 workers
The California Labor Commissioner’s Office issued more than $1.2 million in wage theft citations to a Temecula nail salon for misclassifying and failing to properly pay 36 workers. An investigation found that the workers at Young’s Nail Spa were not paid an hourly rate and not paid overtime despite working up to 50 hours a week.
“Using misclassification as a business model not only denies workers of their rightful pay, but also gives the employer an unfair advantage over law-abiding businesses,” said Labor Commissioner Julie A. Su. “California law is clear that if employers pay less than the minimum wage, when they are caught they will be responsible for paying not just the wages owed, but an equivalent amount in liquidated damages plus interest.”
The Labor Commissioner’s Office launched its investigation when the Labor and Workforce Development Agency referred the case following notification of a complaint filed through the Private Attorneys General Act. Investigators audited the business records over a 40-month period and determined that 36 workers employed at the salon were paid for each salon service performed instead of the total hours worked. Shifts averaged 9.5 to 10 hours per day but workers were not properly paid for overtime, nor provided proper meal and rest breaks. Young’s Nail Spa also failed to carry valid workers’ compensation insurance coverage during the last three years.
The $1,242,227 citation amount includes $670,040 payable to workers and $572,187 in civil penalties. Of the total due to workers, $126,702 is for minimum wage violations plus $17,375 in interest, $144,076 for liquidated damages, $118,825 for failure to pay overtime, $92,492 for not providing final paychecks as required by law, $87,155 for improperly paid rest periods, $65,312 for not providing proper itemized wage statements, and $18,103 for meal period violations.
The civil penalties include $207,887 for failure to maintain valid workers’ compensation insurance, $160,000 for misclassifying workers as independent contractors, $104,000 for not providing proper wage statements and $100,300 for penalties associated with the wage violations.
Enforcement investigations typically include a payroll audit of the previous three years to determine minimum wage, overtime and other labor law violations, and any payments owed and penalties due are calculated. Civil penalties collected are transferred to the State’s General Fund as required by law.
Required workplace postings on wages, hours and working conditions must be posted an area frequented by employees where it may be easily read during the workday. Nail salons have a specific posting required for all Barbering and Cosmetology Licensees.
Source: State of California, Department of Industrial Relations, News Release No. 2016-65, July 30, 2018.