Dealing With The Labor Commissioner—Is A Lawyer Necessary?

Not all employment disputes are filed in court as civil lawsuits.  Employees who believe they are owed wages or expenses may bring an administrative action against their employers with the California Labor Commissioner, also known as the Division of Labor Standards Enforcement (DLSE).  The DLSE handles thousands of labor disputes a year.  In fiscal year 2017-2018 alone, the DLSE assessed more than $78 million wages claimed by employees, and an additional $77 million in penalties for Labor Code violations.^[1]

More often than not, employees and employers are self-represented throughout the DLSE process.  A DLSE claim may be less complicated and more streamlined than civil litigation.  It is still litigation however, and many DLSE claims can be complicated, involving nuanced areas of labor law that only an experienced employment attorney may properly address.  Employers expose their businesses to potential risks if they underestimate the seriousness of a DLSE claim, which could result in significant financial and legal consequences.  An employer that loses a single wage claim may unintentionally create a precedent for other employees within the company to pursue similar claims.  What started out as a single claim becomes a series of claims, draining an employer’s resources.  

Without proper counsel, self-represented employers also run the risk of waiving time limitations imposed on the DLSE, thus turning what should be an expeditious process into an open-ended free-for-all investigation.  Separate, but related, is the possibility that a self-represented employer may not spot statute of limitation issues, typically one of the strongest defenses an employer may have.  Although a lot of information may be found on the DLSE’s website, not all of it applies to every employer.  Without the right attorney on its side, an employer is taking a gamble by handling a matter without understanding the law and the controlling legal authority the DLSE must follow.

Having counsel in a DLSE proceeding is beneficial in multiple ways.  An experienced employment attorney will work with the assigned Deputy Labor Commissioner before and during the DLSE process to ensure the employer’s rights and interests are protected under the law.  Having the right legal representation may also boost an employer’s credibility during the DLSE’s investigation of the allegations brought against the employer, especially if the attorney has developed a good reputation with the particular DLSE office handling the matter.

A matter at the DLSE typically starts with a settlement conference (or “conciliation conference”) similar to what occurs in a civil lawsuit.  After a brief joint session, the employee and the employer are placed in separate rooms.  The Deputy Labor Commissioner then goes back and forth between the parties to discuss the legal and factual issues and communicate settlement offers.  It is critical for employers to have legal representation during this process to ensure the legal issues are correctly framed and applied to the facts of the case.  If no settlement is reached, the DLSE will hold a hearing at a later date.  This is an evidentiary hearing similar to trial in Superior Court.  At the hearing, evidence is presented, witnesses give testimony under oath, they are cross-examined, and closing arguments are made.  Although less formal than a civil trial, the Hearing Officer serves as the judge and issues a written decision to which the parties are bound.

Having counsel at the hearing is extremely important to ensure the employer’s best case is presented in its defense.  It is wise to have counsel involved at the outset of the case.  Waiting until the hearing stage may prove to be too late, limiting the attorney’s options and strategy.  If involved at the beginning, the attorney is best able to serve an employer at the hearing, and should it become necessary, to appeal the Hearing Officer’s decision to Superior Court.  

Does an employer need legal counsel when dealing with a current or former employee’s DLSE claim?  Absolutely.  And the earlier an employer engages defense counsel, the better.  Otherwise, an employer may find truth in the old adage, “penny wise and pound foolish.”