State audit finds major backlog of wage theft claims in California

Claims of wage theft filed by California workers are routinely left in limbo for years by state investigators who are facing a massive backlog of cases, according to a recent audit of the California Labor Commissioner’s office.

As a result of the sluggish pace, workers are left waiting years to receive money they may be owed, the audit found.

When claims are eventually investigated, the Labor Commissioner’s Office often does not recover wages. The audit found that in cases where workers requested help recovering their wages, they received the full amount owed to them only 12% of the time.

The backlog of unresolved cases has more than doubled in the last five years, from 22,000 claims in fiscal year 2017-18 to 47,000 in fiscal year 2022-23, the audit found.

The Labor Commissioner would need “hundreds of additional positions under its existing process to resolve the backlog,� California State Auditor Grant Parks wrote in a letter accompanying the audit to Gov. Gavin Newsom and state lawmakers Wednesday.

Wage theft occurs when employers fail to pay minimum wage or overtime rates or force workers to forgo legally required break times.

State law requires that a decision be made on a wage claim within 135 days from when it was first filed. But the Labor Commissioner’s office often takes two years or longer to process wage claims — more than six times longer than the law allows, the audit found.

Some 2,800 claims involving upwards of $63.9 million in unpaid wages have been open for five years or longer, according to the audit.

“Workers have virtually no recourse because it takes so long. We need emergency hiring of these positions. We need the state to deal with it,� Lorena Gonzalez, head of the California Labor Federation, said of the audit’s findings.

Gonzalez said the audit underscored a problem that labor advocates and others have pointed out for years. She criticized the state for failing to act with urgency to better protect workers vulnerable to exploitation, especially low-wage laborers.

“Where is the outrage? How many hearings have [lawmakers] had on retail theft, on crime? Well this is a crime, and it happens every day to working people.�

The Los Angeles, Oakland, and Long Beach field offices of the labor commissioner have among the biggest backlogs of claims and on average take the longest to close wage theft investigations, according to the audit.

A slow hiring process and low salaries that make it difficult for the agency to retain staff and fill positions have contributed to the high vacancy rates. Vacancy rates in field offices ran as high as 45% in Santa Ana, 44% in Sacramento, 38% in Oakland and 35% in Los Angeles and Long Beach as of June 2023.

But even if all vacant positions were filled, the labor commissioner would be short of the manpower needed to address the backlogs and process claims in the time frame required by law, the audit found. The labor commissioner has about 315 positions, about a third of which are vacant. But it needs 892 full-time positions, nearly three times as many, the audit said.

The audit found that poor technological infrastructure that has led to inaccuracies, and spotty data in the agency’s case management system has also made it difficult for the office to track claims.

California’s Department of Industrial Relations, which includes the Labor Commissioner’s Office, said it “is committed to finding ways to continually improve its programs and ensure that it meets its mission to protect and improve the health, safety and economic well-being of over 18 million wage earners.�

The department’s director, Katrina S. Hagen. said the division is working on improvements to the case management system and conducting a study of staff salaries to improve retention.

And last week, the Department of Industrial Relations announced $8.5 million in grants to 17 local prosecutors to run wage theft enforcement programs locally and bring criminal charges against problem employers.

Other California agencies responsible for enforcing labor laws have also been beset by staffing problems and claims of ineffectiveness. The Division of Occupational Safety and Health, known as Cal/OSHA, is grappling with a 38% job vacancy rate and faced sharp criticism at a February hearing of the Assembly Committee on Labor and Employment, where farmworkers testified that they’d been exposed to extreme heat and pesticides on the job.

The release of the audit comes as lawmakers and lobbyists are in negotiations over the future of California law that labor leaders say is a crucial alternative for dealing with wage theft and other workplace abuses.

The law, known as the Private Attorneys General Act, or PAGA, gives workers the right to file lawsuits against their employers over back wages and to seek civil penalties on behalf of themselves and other employees.

A business-backed initiative seeking to repeal the law will appear on the ballot in November, unless a deal is reached in the next few weeks.

The California Labor Federation and other labor groups are backing Assembly Bill 2288, introduced by Ash Kalra (D-San José), that aims to give PAGA more teeth by allowing courts to order employers to correct violations. Advocates say it will help ensure bad behavior by employers is halted, rather than simply awarding a settlement and allowing a company to go back to problematic practices.