Two client companies in California are liable for $1.6 million in wage violations caused by a subcontractor, the California Labor Commissioner announced last week.
Under California law, client employers share all civil legal responsibility and civil liability for wage and hour violations for all workers supplied by that labor contractor.
“State law prohibits employers from entering into a contract that does not include sufficient funds to pay required wages,” Labor Commissioner Lilia García-Brower said. “Entities who contract with the lowest bidder should be aware that they will be held liable if that vendor cuts corners by committing wage theft.”
The office cited Anaheim, California-based Inventory Professionals Inc. $1.6 million for wage theft violations affecting 64 workers. As client employers, grocers Trader Joe’s and Grocery Outlet are each liable for $825,813.
State investigators found the 64 workers — who conducted physical inventory counts in more than 300 Grocery Outlet and Trader Joe’s stores in the state — worked approximately 65 hours a week during a three-year period ending in August 2018. However, they were not paid the minimum or overtime wages due, according to the office. The investigation also found that two minors, aged 14 and 17, worked until 2 a.m. in violation of California’s child labor laws.
Inventory Professionals owner Arun Gandhi is held jointly and severally liable for the full citation amount due, according to the office. That includes $550,033 in unpaid minimum wages, $262,871 in unpaid overtime, $645,937 in liquidated damages and $149,885 in waiting time penalties. Inventory Professionals was also fined $1,500 for its failure to secure minors’ work permits or maintain records on the minors.
“Trader Joe’s and Grocery Outlet are responsible per California’s client-employer liability law, in effect since 2015,” according to the office. “The law holds client employers that obtain labor from a subcontractor liable for their workplace violations. A client employer may have to pay for the subcontractor’s owed wages, damages and penalties, as well as workers’ compensation violations.”