Employment Law Daily $4.2M consent judgment resolves storied California car wash off-the-clock wage-hour suit
Monday, July 23, 2018

$4.2M consent judgment resolves storied California car wash off-the-clock wage-hour suit

By Pamela Wolf, J.D.

A wage and hour case with a storied history that included sanctions against Littler Mendelson defense attorneys and spoliation of videotape evidence has reached a resolution under which 800-plus employees at 12 Southern California car washes will receive a share of $4.2 million in recovery obtained by the Department of Labor. Under a consent judgment, car wash operator Vahid David Delrahim and his related businesses will pay $3.8 million in back wages and liquidated damages for FLSA violations and $400,000 in civil money penalties, the DOL announced.

Off-the-clock work. The DOL’s lawsuit and investigation found that Delrahim required employees at his company’s car washes to work off the clock at the beginning of each shift and to clock out, but to remain at the car washes, when business was slow. The violations resulted in unpaid wages amounting to, on average, several hours of pay each day. As a result of the judgment, some employees will receive more than $10,000 in back wages.

Discovery sanctions. Earlier this year, on March 28, a federal district court in California sided with a Special Master who had determined that the owners of the car washes and their managing agents should be sanctioned for spoliation of evidence by precluding them from using videotapes of workers’ activities that they had destroyed and imposing a presumption that the videotapes would have been unfavorable to the defendants. Since the carwashes allegedly have not maintained accurate records of the hours that employees worked, the surveillance tapes would have been the best evidence of the actual hours worked, according to the DOJ.

The court also agreed that the defendants should be required to pay $19,487 in attorneys’ fees for various discovery abuses.

Temporary restraining order. The ethics of Littler Mendelson attorneys were called into question by the contrary declarations of employees whom the DOL had already determined to have been shorted of their wages. The court considered meetings between employees and defense counsel, which were aimed at obtaining employee declarations that they had not worked “off the clock,” to be “inherently coercive.”

The court entered a temporary restraining order in the case, among other things, enjoining the defendants, their agents, and their counsel from taking any further steps to retaliate or discriminate against any current or former employee of the 12 car washes at issue in the litigation, or any potential witness, “including communicating with any non-managerial worker regarding any underpayment or nonpayment of wages due or other violation of the FLSA outside the presence of counsel for the Secretary.”

Other relief. In addition to the $4.2 million in unpaid back wages and penalties, the consent judgment contains several provisions to ensure the defendants’ future compliance with the law, including one year of oversight by a court-appointed independent monitor and issuance of notices by the defendants to workers and managers on employees’ FLSA rights.

Among other things, the defendants, their officers, agents, and employees are prohibited from taking any action to deter employees from asserting their rights under the FLSA or interfering with any U.S. Department of Labor investigation of wage or other violations, including coercing, intimidating, or disciplining employees whom they believe have reported complaints or provided information to the U.S. Department of Labor or the Independent Monitor, or attempting to deter or influence complaints made to the U.S. Department of Labor or the Independent Monitor.

“This is a major win for hundreds of employees systematically abused by one of Southern California’s largest car wash operators,” said Wage and Hour Division Acting Regional Administrator Juan Coria. “This landmark case sends a powerful message that the Department of Labor will use strong law enforcement and litigation tools to protect employees and level the playing field for law-abiding employers.”

“The court’s decisions make clear that our laws protect workers, and neither an employer nor their attorneys may interfere with their rights,” said DOL Regional Solicitor Janet Herold. “The integrity of our justice system depends on employers’ and their attorneys ensuring that a true and accurate record free of any undue influence is presented to the court.”

The Labor Department filed its lawsuit in the Central District of California; the case is No. 2:16-cv-04547-FMO-AGR.

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