Employers know that they are regulated by state and federal laws. However, few employers know the extent to which they are regulated and are caught off guard when regulators show up during peak business hours to conduct an inspection of their facility and records. This is a quick overview of an employers’ rights during such an inspection.
In California, the Labor Enforcement Task Force (LETF), which is a coalition of California State and local enforcement agencies formed to combat what it refers to as the “underground economy”, catches many employers off guard. LETF teams conduct monthly inspections and operate under the direction of the Department of Industrial Relations (DIR). LETF member partners include DIR divisions Cal/OSHA and the Labor Commissioner's Office, the Contractors State License Board, the Employment Development Department, the California Department of Insurance, the Bureau of Automotive Repair, Alcoholic Beverage Control, the Board of Equalization, as well as the California State Attorney General and county district attorney offices. The coalition’s methods are viewed as aggressive, and they refer to themselves as “vigorous” in their enforcement duties. LETF reported in 2015 that it issued $8 million in assessments, which was an increase over prior years.
How Does the Labor Enforcement Task Force Work? Inspectors will arrive at your place of business and ask to see records, inspect your facility and speak with employees. The inspection is usually without notice, and for a small business it can be overwhelming to have up to 10 people walk in and start asking to see your books and records while walking around and talking to staff.
Each inspection starts with an introduction where the employer will have explained to them the inspection process. However, because it all happens quickly much of what they say may be lost. Just know, that each agency has a specific set of records they want to review, and has specific aims in terms of their interview. Be sure to get business cards from EACH agent that is there. You may need them later. Feel free to repeat back your understanding of the process. If you have questions, ask them then. Also ask them if they will give you time to have counsel present. Some inspectors will return in 1-2 hours to allow you to get an attorney there to help with the process.
After the introductions, there will then be a review of records, and an interview of employees. When LETF is completed the team will review their findings with you. Those findings usually include violations and citations.
How Do They Choose Who to Inspect? Businesses are selected due to: (1) a past violation; (2) a complaint regarding conduct that is not compliant (such as a wage claim); or (3) an industry specific target – such as restaurants or repair facilities. Currently LETF has identified the following industries that it is strategically investigating: Car Washes, Restaurants, Garment Manufacturing, Roofing, Agricultural, and Automotive Repair.
What Should An Employer Do If they Are Inspected? Generally the agencies aren’t out to shut you down. However, you do need to know your rights. It is important to acknowledge their right to be there and be respectful as they are just doing their job. However, you need to know when you can object to what they are doing as well.
What Kind of Fines Can An Employer Expect? The fines are varied, and may include notices to simply post posters and update policies within a set time period. However, the reality is that the average employer will receive some type of fine. These fines can be negotiated. However, certain violations are so severe that the fines can be assessed as daily fines and penalties. If an employer fails to comply or the coalition finds what it deems to be egregious violations it has the ability to issue a STOP Order and shut your business down.
What Can An Employer Do Now? Many people wait to hire a lawyer until they have a problem. However, as the laws become more complex, and carry with them stiff fines to fund government agencies it is imperative that even a small business join forces with legal counsel or at a minimum a trade organization. While legal counsel will be reviewing your specific business and helping ensure you are abreast of the changing laws, a trade organization can keep you informed and provide you access to information. For example, California Restaurant Association will provide employers in the restaurant industry guidance and access to legal counsel on a monthly basis. Creating a relationship now will help ensure that a business is compliant before the task force opens the business door.
This report was reviewed for legal accuracy and updated in 2016 by Berliner Cohen Attorneys at Law.
Find quick answers to your questions about the CRA and navigating calrest.org.