Speaker 1: Right, And I'm just talking about a few hours here.
Speaker 2: You know, if you fail to pay them for a
week or two weeks or even the whole month, that
balloons up.
Speaker 1: And so you've got huge, huge companies Walmart, Chipotle.
Speaker 2: I mean you're talking about public companies with legions of
lawyers that have gotten into problems with failing to pay
minimum wage or not keeping up with all of California's
complex labor laws.
Speaker 3: You are listening to Carrie Letz's Financial Survival Network, where
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Speaker 4: And welcome. This is Financial Survival Network. I'm your host,
Kerrie Lutz. Happy New Year to all. This is the
first show I'm recording in the new year. I mean,
I've only done nine thousand in the past fourteen years.
It's January sixth, and you know, one of the nice
things that happens if you're a low age employee, even
if you're not that low age anymore, come January First, generally,
many states and municipalities counties raise their minimum wage, so
you might have gotten a raise and you didn't even
know about it. If you're an employer, though, this opens
up a whole Pandora's box because you better be paying
that minimum wage and not a penny less, because if
you do, you could get sued. Have an expert on
with us now, paragu el Amin, attorney from the People's
Republic of California, and I mean it's great to have
you on the show. So you're a fast food restaurant
and you forget to increase your staff's pay because you
know the bookkeeper missed it, and you don't do it
for like a month. What can happen to you for
not paying the state minimum wage in the place like California?
Speaker 2: Ok, you could be looking at closing doors. I mean
it is severe. So if you fail to pay minimum wage,
what can happen for any time work? What can happen
is you owe them the minimum wage. You're going to
owe them back pay for every day that you failed
to pay them, plus interest, and if they sue, you
have to pay their attorney's fee. So let's say for
every thousand dollars you fail to pay an employee. Per employee,
you're probably realistically looking at after even the first month,
at least three to five thousand dollars that you're going
to pay per employee.
Speaker 4: Per employee, Oh my god, you got like thirty forty
of them that could put you under.
Speaker 1: Right, And I'm just talking about a few hours here.
Speaker 2: You know, if you fail to pay them for a
week or two weeks or even the whole month, that
balloons up.
Speaker 1: And so so you've got huge, huge companies Walmart, Chipotle.
Speaker 2: I mean you're talking about public companies with legions of
lawyers that have gotten into problems with failing to pay
minimum wage or not keeping up with all of California's
complex labor laws.
Speaker 4: Yeah, so if you forget to pay them for lunch,
because if they work through their lunch, that's like another
hour you got to pay them for it, right, And
if you don't pay them for lunch, you got a
whole plethora of potential liabilities there too.
Speaker 2: Right.
Speaker 1: Yeah, so you've got two issues.
Speaker 2: One, they work through their lunch break and let's say
you didn't pay them, Well, that's a meal missed meal
and rest break, which is a penalty. And then you
can have a failure to pay for the time, which
is a different penalty and different interests.
Speaker 1: So you can get hit twice in the same violation.
Speaker 4: And there's like companies out there that haven't been paying
their workers for years, right for these breaks.
Speaker 1: Yeah, that's right.
Speaker 2: And then so what happens then is, so we just
talked about this example, they worked through the lunch, you
didn't pay them for the lunch, you didn't give them
their meal.
Speaker 1: And rest break. That's a violation.
Speaker 2: Now the wage statement you gave them and is inaccurate,
which is another violation.
Speaker 1: So as you can see, these things balloon up.
Speaker 2: And so what happens is California enacted the Private Attorney
General Act, and so the way that works is private
attorneys are essentially deputized to be able to bring these
lawsuits on behalf of the state of California against employers,
including huge ones like Walmart, Chipotle, et cetera.
Speaker 1: And so what happens is the state.
Speaker 2: Also gets a huge windfall of money from the recovery,
over half for penalties, and a percentage of that goes
to employees, the aggrieved employees, the ones who were actually wronged.
Speaker 1: And then the government keeps the rest.
Speaker 2: And the benefit to the state is obviously not only
does it get this money, but also it didn't have
to spend any money to get it because it deputized the.
Speaker 1: Private attorneys doing all the work to go get it.
Speaker 4: Oh goodness, why does anybody have a business in California.
That's what I would like to understand.
Speaker 2: Well, California is still one of the top economy in
the in the country, the biggest economy it is. It's
higher than many other countries around the world. So from
an economic strength perspective, I think it comes down to
the sheer population that California has, combined with the weather.
If it didn't have both of those things, I think
that California would get heavily punished for its policies.
Speaker 1: M M yeah, so.
Speaker 4: Yeah, Well, but you know, the states that don't penalize
their businesses are growing five times faster than the states
like California, New York, Illinois. You know, any blue state
you could point your finger at is is growing slower
than the top red states. So here we have the
top five by GDP states California three point three trillion,
Texas one point eight seven trillion, all right, and Texas
has roughly thirty million people, California has got forty million,
New York one point five six, Florida is number four
at one point one point one in Illinois eight seventy five.
So of those states to the top five, the two
that have grow in the fastest are the ones that
hassle their businesses the least.
Speaker 2: That's I mean, there's certainly something to be said about that, Carrie.
I think that there should be a balance. I mean,
even in the numbers that we just heard, you still
hear that the California is almost twice that of Texas,
even though the population isn't twice. So there is an
aspect of doing business in California there is I refer
to it as the weather tax. A lot of people
want to be here. Both are the ocean, enjoy the
nice California weather. But again I think that there's there's
limitations to what businesses and people are willing to put
up with. And we've seen a large exodus of businesses
from California due to California's policies.
Speaker 4: Yeah, you know in Florida. Here they say the wage
rates are lower than elsewhere in the country. They say
you get paid in sunshine in Florida. And in addition,
though we have no state income tax and companies pay
a smaller income tax. And you know, our government is
less than our budget is less than half of New
York States government budget, So a lot of that GDP
could be artificially inflated by government expenditures because in California
you got the highest taxes in the country, you got
the highest paid government workers, all these things. But getting
back to our main topic here, you know you're basically
a target. Do you just pay more than the minimum
wage so you don't have to worry about it? Is
that what you look to do here? That won't get
you for the breaks or like they had wash up
time where you wouldn't pay the employee for five minutes
while they got their aprons on and their hats, and
then the state figured out you should have been paying
them for that, and that turns into like a huge liability.
Is there any way to avoid all this short of
moving out.
Speaker 1: Of the state.
Speaker 2: No, So what you have to do is, you know,
it's an interesting question because the question is that, well,
if I pay more than minimum wage, then do I
get out of this issue of failure to pay minimum wage,
And the short answer is maybe, but not really, because
you get out of one potential problem, which is the
issue of failure to pay minimum wage is failure to
pay minimum wage for all time worked. Now, if somebody
works an hour and they weren't paid, that's still a
failure to pay minimum wage for that hour. So there's
that issue, and then you've got a broader issue of
the penalties in interest are calculated based on what the
person should have been paid, which can become a complex
calculation based on the regular time plus potentially overtime and
bonuses and incentive comp So you could still potentially end
up paying way more just because you're paying the person more.
Meaning said differently, if you're paying the minimum wage, your
penalties and interest, et cetera, would be based on that
minimum wage. But if you're paying them a higher wage,
and those numbers are going to be based off that,
so you're going.
Speaker 1: To be looking at an overall larger number.
Speaker 2: So to answer your question, carry the best thing to
do is just to ensure you're in compliance, which is
very very difficult to do, but it's absolutely necessary because
the penalties and the repercussions are so high.
Speaker 4: Can you can you do an audit to figure out
if you're screwing up here, and then you go correct
it on your own so you don't have to worry
about someone coming after you.
Speaker 1: Absolutely, So it's a double edged sword.
Speaker 2: And I've had clients do this because being an attorney
who helps a lot of business owners with employment and
business dispute matters, we have clients who will come in
with this issue. And here's the concern that comes up
a lot of times is you'll have people who have
built these companies where, for example, some people really prefer
to be ten ninety nines.
Speaker 1: So they say, look these workers.
Speaker 2: Maybe it's trucking, maybe it's the cleaning business, but regardless
of what industry it's in a lot of times people
prefer to be ten ninety nines and that way they
can write off certain expenses, et cetera. But the problem
with it is California has a very strict rule with
who is considered an employee. And there's something called AB
five Assembly Bill five that was passed that severely restricts
who can be considered an independent contractor. And so one
of the requirements has none of the requirements rather have
anything to do with what the employer wanted or what
the other person wanted, the independent contractor or the employee,
that's not really considered and so it's almost impossible to
pass that three point test.
Speaker 4: Yeah, like Uber drivers are now considered employees, right, well.
Speaker 2: So there is a special exemption to that. They would
have been yes, but then there was a proposition that
was passed to allow them to continue operating in that manner.
But Uber and Lyft spent a tremendous amount of money,
talking about billions and billions of dollars to help get
that proposition passed. But everybody else who's not Uber and
who's not Lyft in this ride share economy business, they're
stuck with this with Assembly Bill five because the three
part test is they have to have an independently established business,
they have to be in a business that's different than yours,
and they.
Speaker 1: Have to be free from your direction and control.
Speaker 2: All three of those things have to be true for
them to actually be considered an independent contractor. And if
they're not passing that test, then they're an employee. And
what happens is if you ten ninety nine them, you've
got all the things that we just talked about, including
failure to pay overtime, which by the way, in California
is if you go over forty hours a week or
over eight hours in a day.
Speaker 1: So a lot of people get that wrong. Or if
you've got a situation.
Speaker 2: Where they missed a meal or rest break, you've got
a problem there. If you didn't pay minimum way for
all the time, you've got a problem there. And then
of course you've got all your attorneys fees, and then
you've got PAGA that we just talked about, which a
lot of employers don't realize. And what happens is they're
doing this across scale, multiple people. And so recently we
settled a PAGA case for a client where they were
doing everything right, including or seemingly at least they thought,
including their people are making six figures a year, carry
six figures.
Speaker 1: A year, six figures.
Speaker 4: They're not exactly the people who are being exploited by
the evil business owners here, that's right.
Speaker 2: Yeah, And at the end of the day, you know,
it's the business owners who are barely making it. They
take all the liability the risk to create this business.
And the reality is in California, the individual business owner
is responsible for unpaid wages meaning you cannot just bankrupt
the business out of it. You cannot close the business
and not have to pay it. You're personally responsible. And
to add to that, when it comes to PAGA penalties,
those you cannot even discharge it bankruptcy. They follow you
forever because they're considered government penalties that you as a
matter of public policy and law, you can't get out
of government penalties by declining bankruptcy.
Speaker 1: That's nuts.
Speaker 4: All right? Well, I guess an ounce of prevention is
worth many hundreds of thousands of dollars of cure. And
people want to find out more about your parrogue, how
you can help them in these situations. How did they
contact you? How did they connect with you on the web?
Speaker 2: Yeah, my pleasure to help them carry They could reach
out to me at www dot l awpla dot com.
That's www dot law pla dot com. And they can
find me on Instagram or we've got a TikTok.
Speaker 1: Now it's Pa r A G. So my first name Perogue,
last name Ami A M I n ESQ.
Speaker 4: All right, excellent. Well, being a solopreneur, I have some contractors,
but I'm here in Florida, so I don't have to
worry about California. I would move if I lived in California.
I don't care about the weather or whatever. It's almost
as good here in Florida. Sometimes it's better, sometimes it's
a little worse in the summer.
Speaker 1: Whatever.
Speaker 4: I've got a question for Parrogu or myself, email klatcarrieluts
dot com. You'll find a link to Prague's site in
the show notes of this interview on Financial Survival Network
dot com and just ask when you go there, sign
up for your free newsletter. Like over sixty thousand other
FSN community members have prog really appreciate you coming on.
Speaker 1: We'll talk to you again, so always a pleasure.
Speaker 3: Thank you, thanks for listening to Carrie Letz's Financial Survival Network,
your solution to today's trying times. For the latest, go
to Financial Survivalnetwork dot com. Financial Survival Network now more
than ever