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Despite Record Budget Surplus, California Unlikely to Fix Massive Wage-Theft Claim Backlog Anytime Soon

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A women standing in a field at a park.
María says her former employer at the Berkeley restaurant where she worked for more than 10 years owes her $35,000 in unpaid wages. Her claim with the Labor Commissioner's Office is one of thousands that have been pending for three or more years. (Farida Jhabvala Romero/KQED)

Even as California enjoys a staggering budget surplus estimated at $68 billion, tens of thousands of workers who claim they were shorted on their paychecks are expected to continue to endure exasperating delays — often stretching years — at the state agency charged with investigating wage theft.

The California Labor Commissioner’s Office, plagued by vacancies, is struggling to efficiently process 36,200 pending claims for unpaid wages. Close to half of those cases have taken longer than a year to resolve, while nearly 4,000 have languished for three years or more, according to Labor Commissioner’s Office records requested by KQED.

The number of Californians directly hurt by the long wait times could be much higher, as multiple employees often jointly file one claim against an employer. The delays, which worsened during the pandemic, can make it more difficult for workers to ultimately recover any owed wages, and fuel an environment of impunity, according to labor enforcement experts and worker advocates.

María, a restaurant worker, has waited almost four years for a ruling on her claim for $35,000 in unpaid wages. KQED is withholding her full name because she fears it could hurt her case.

In the more than a decade that she washed dishes and cleaned at a Berkeley restaurant, María often worked overtime, she said. But her employer didn’t compensate her for those hours, or provide her with meal and rest breaks or paid sick leave, as required by law, according to her complaint filed in July 2018.

Meanwhile, the 50-year-old single mother of four, who is originally from Mexico, said she needs a resolution to her case urgently, noting that she has fallen behind on rent and fears her family could soon be evicted from their apartment.

“It’s very difficult for me to support my family and keep up with all of our expenses and bills,” María said in Spanish. “It’s taken too many years. As workers we have rights, and we need the authorities to solve this problem and do their job as it should be.”

Why the wait is so long

Many cases reach a settlement early in the Labor Commissioner’s wage-claim process, one originally designed as a faster and free-of-cost alternative to filing a lawsuit in state court. But the disputes that remain unresolved are given a hearing, a trial-like event that aims to offer due process to both employers and workers.

By law, the Labor Commissioner, also known as the Division of Labor Standards Enforcement, must hold hearings within 120 days of the date the claim was filed. Yet California workers are forced to wait an average of 808 days, or more than two years, for a hearing to resolve their case, according to agency data. The worst delays, averaging more than three years, are in the Oakland branch, where María submitted her claim.

A spokesperson with the Department of Industrial Relations, which oversees the Labor Commissioner’s Office, said the number of pending claims may include cases where the status was not updated, as the agency began using a new computer-management system in 2016. But she did not elaborate on why those errors have not yet been fixed, or how many cases still listed as pending may actually have been closed.

Nearly 24,000 claims have been filed on average per year since 2015.

In a statement, Labor Commissioner Lilia García-Brower acknowledged that the wait times for wage claim and citation hearings are “unacceptable.”

“While the problem of backlogs is not a new one, I am committed to doing everything in my power to reduce the amount of time workers who have suffered wage theft have to wait for justice,” she wrote. “My office is working tirelessly to improve the existing backlogs that were worsened by the COVID-19 pandemic.”

Understaffing is a big problem at the agency, which scheduled more than 29,000 hearings for wage claims from 2019 thru 2021. Hearing officers must consider evidence and issue a final decision on individual worker complaints, as well as employer appeals on hundreds of citations issued by the agency. Millions of dollars in fines and back wages are often at stake in those more complex cases, which can affect hundreds of employees at a time, and require hearings that last several days.

But currently, the Labor Commissioner has only 64 hearing-officer positions, and not all of them are filled.

Gov. Gavin Newsom’s office has proposed adding just six more hearing officers and 17 other staff to support the wage-claim process statewide for the next fiscal year, which starts in July. That’s in part due to the increased workload the agency expects to have, resulting from new laws expanding its enforcement authority.

Worker advocates have applauded that expansion, but warn that far more hearing officers are needed to address the huge backlog in a timely manner.

“Given the numbers we are talking about, I’m not confident it’s going to make a meaningful dent” for workers, said Shane Gusman, who directs the California Teamsters Public Affairs Council. Gusman has lobbied in Sacramento for improvements at labor enforcement agencies, which he says have been historically starved for cash.

“Even though there's been growth in personnel and resources, they've never caught up,” said Gusman. “You could double the Labor Commissioner's Office budget, and they would still be underfunded.”

In fact, Newsom’s office has proposed cutting the agency’s relatively small budget, of about $155 million, by 6% next fiscal year, including a decrease of nearly $1 million for its wage-claim adjudication unit, according to records from the state Department of Finance. The overall budget reduction is due to the expiration of one-time funds for pilots and other projects at the division, finance officials said.

Vacancies fueled by a catch-22

Officials at the Labor Commissioner and its parent agency, the Department of Industrial Relations (DIR), could request more funds from the budget being negotiated in Sacramento to hire additional hearing officers, as they’ve done in previous years. But any significant increases are unlikely to be approved by Newsom’s office and the Legislature, given DIR’s already high vacancy rate of 25%, a gap lawmakers mentioned during a February budget hearing.

“We wouldn't necessarily give them more money if they have all these vacancies for the positions they currently already have” funds for, said San Francisco Assemblymember Phil Ting, who chairs the Assembly’s Budget Committee.

“We have more money, more resources. We could definitely assist,” said Ting, referring to the state's abundant surplus. “But all we can do is just keep pushing them to hire those [vacancies] as fast as possible, get them up to speed as soon as possible so that they can start processing these claims.”

Ting, who used to work for a nonprofit organization that represents lower-income workers in wage-theft cases, said the budget committee would look into holding another oversight hearing into the long-standing vacancy problem in the fall.

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In fairness, many employers are having trouble hiring and retaining workers as the pandemic drags on, and the state hiring process can be slower than that of the private sector, with several layers of bureaucracy that may be involved.

For example, DIR vets many steps of the hiring process, from the language in job postings to the list of questions candidates can be asked during an interview, and the department is notoriously slow in approving hires, said Garrett Brown, a retired inspector from the Division of Occupational Health and Safety, or Cal/OSHA, another agency beholden to DIR’s hiring approval.

“The problem here is failing to hire, and the failure to hire [is due to] difficulties in the state employment situation generally, magnified by many, many times, by the inability of the DIR HR staff to competently and swiftly hire and fill vacant positions,” said Brown, who has tracked vacancies for safety inspectors and other positions at his former agency for decades.

“The buck stops with the DIR director, Katie Hagen,” said Brown. “She was supposed to solve this problem.”

Hagen, who was appointed by Newsom in March 2020, does have a background in human resources. She declined an interview with KQED, but said in a statement that her department and the Labor Commissioner’s Office strive to hire qualified candidates “in line with the state’s merit based hiring requirements.”

“The goal of DIR and the Labor Commissioner’s Office is to fill all vacant positions within the Department as quickly as possible, and the Department is making steady progress,” wrote Hagen. She added that the Labor Commissioner made 104 hires in its wage-claim adjudication unit between January 2021 and last April.

That figure points to jaw-dropping turnover at the unit, which has a total of 250 positions this year. The vacancies are contributing to low morale, said local attorneys who represent Bay Area workers in wage-theft cases. (Low morale also is leading to attrition at a federal labor law enforcement agency, according to a recent Bloomberg report.)

María, the restaurant worker in Berkeley, said she’s cutting costs by going without things like new clothes, while trying to fight a gnawing fear that she might not recover the wages she believes she’s owed.

She feels frustrated not just for herself, she said, but for the thousands of working Californians who also are forced to wait years for a resolution, including many who can’t afford to have their wages stolen — and is incredulous the state hasn’t found a way to fix the delays.

“The state has enough money,” María said. “Why don’t they solve this problem?”

This story was produced in collaboration with the California Newsroom.



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