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A Case Study - Falsified Time Records

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Caught red-handed 

Case studies are a good way to illustrate the law. In this case study I’m going to talk about a company that falsified time records. And they got caught red-handed.
I’ve changed the names, in order to protect the not so innocent and just so I can editorialize a little bit. It gives me a little more license, so to speak.
But, I can assure you - that other than changing the names and some identifying information - - this crap really went down. 
So, if you want to find out how you may be entitled to A LOT of money for unpaid wages and/or penalties under California Labor CodeCalifornia Wage Orders and/or California's PAGA laws; I suggest that you keep reading. 
I suggest that you not miss the editorializing at the end of this article. 

It's purely coincidental

With that being said.... any resemblance to actual events or an actual case is purely coincidental. And if it hits too close to home - just remember - truth is always a complete defense.
In this case study we’ll call the company “El Liquorida Restaurant, Inc.” Again, this isn’t the real name, so don’t Google them. And if you own a restaurant by this name - sorry, it’s not about you...

What went down at the El Liquorida was really bad stuff - falsified / altered pay records

There are four locations for the restaurants. An employee came forward saying that he wasn't paid for all the time that he worked, that he wasn’t paid minimum wage and he wasn’t paid the overtime pay that he was owed.
The owner initially produced inaccurate pay records.The records were fabricated or falsified to show that the restaurants paid the employee minimum wage and overtime pay.   The records showed that the employee worked about 40 hours a week, was paid for all the time that he worked and that he received overtime when it was required.
The owner further provided statements that the employee had been paid properly and the records produced were accurate.

It all starts to unravel 

Then, following this, additional employees came forward, making the same complaints that they also weren’t paid properly.
Based upon further investigation, it was discovered that the clock in and clock out times had been altered. Meaning, that the workers time records were falsified to show that the employees worked less time than they actually worked. This is payroll fraud.
Further investigation revealed that numerous time records were not correct. It turns out that the El Liquorida owner kept two sets of books.  He had provided fabricated records to his accountant. One that he gave to his accountant and another that proved that he was “cooking the books,” so to speak.
Worse, employees came forward saying that the owner had told employees to lie about the coverup.
The employees said that the El Liquorida owner had pressured them to lie and to sign statements that their time sheets were accurate, when, in fact, they were not accurate.  

It was also discovered that someone had edited time records/ punch records of the employees.  Hours had been manually removed or reduced on the computer system.
Then it was discovered that rather than giving his accountant the timekeeping records themselves, that the owner would give the accountant summary sheets indicating hours worked each day and the total weekly hours and tips.  These summary sheets indicated that employees worked even fewer hours than did the altered timekeeping records showed.

Why is Bill Turley asked to testify concerning wage law legislation at the California State Senate and the California Assembly?

A No B.S. straight-shooter lawyer

Believe it or not, Bill is known for being a no B.S. straight-up lawyer. Besides being known as one of the leading experts on this area of the law in California, one of the reasons why Bill is asked to testify at legislature hearings is because he is known for being straight-forward and blunt. He is known for being no B.S., with no lawyer-talk, no double-talk.

A legal analysis of the El Liquorida case based upon California wage law

Let’s apply California law to the facts of this case. It all starts with the California Labor Code. For restaurant workers - Wage Order 5 applies. 

Minimum wage 

Not paying for all time worked is illegal under California law. Under California law, employers must pay at least the minimum wage or the agreed upon wage.
Under California law, employers must pay employees at least the minimum wage and legal overtime compensation for overtime that is worked. California Labor Code Section 1194.
At a minimum, the workers were entitled to at least minimum wage for all hours worked. In addition, they were also entitled to be paid the agreed upon rate. Meaning, if the El Liquorida restaurant agreed to pay an employee $14 an hour, then the worker is owed that amount per hour, even if it’s more than minimum wage at the time.

Liquidated damages

If you aren’t paid at least minimum wage then you may be entitled to liquidated damages. Which is double the minimum wage rate.  California Labor Code Section 1194.2 (a).
Stated differently, under California law, if you aren't paid at least minimum wage for all the time that you work - then you may be able to recover twice the minimum wage rate in what the law calls liquidated damages.
The “liquidated damages” allowed in section 1194.2 are in effect a penalty equal to the amount of unpaid minimum wages. Martinez v. Combs, 49 Cal. 4th 35, 48 (2010).
The “liquidated damages” allowed in section 1194.2 are in effect a penalty equal to the amount of unpaid minimum wages. Martinez v. Combs (2010) 49 Cal.4th 35, 48, fn. 8.
Here, the argument is that based upon these egregious facts almost every judge would award liquidated damages.

Overtime pay

In California, overtime is any time or hours you work over eight (8) hours in a day or forty (40) hours in a week.  California Labor Code Section 510. In general, any work in excess of 8 hours in a workday must be compensated at a rate of no less than one and one-half of your regular rate of pay. California Labor Code Section 510.
Any work in excess of 40 hours in a workweek must be compensated at a rate of no less than one and one-half of your regular rate of pay. California Labor Code Section 510.
Thus, applying California law, the workers are owed time and one-half for all hours that they work in excess of 8 hours a day or 40 hours a week.

Meal breaks

“An employer's duty with respect to meal breaks … is an obligation to provide a meal period to its employees. The employer satisfies this obligation if: 
  1.  It relieves you of all duty,
  2.  Relinquishes control over you activities and
  3.  Permits you a reasonable opportunity to take an uninterrupted 30-minute break, and
  4.  Your employer does not impede or discourage you from doing so.
  Brinker vs. Superior Court  (2012) 53 Cal.4th 1004, 1040.

This is all based upon the ground-breaking California Supreme Court case - Brinker vs. Superior Court. I know the Brinker case very well, because I represented the workers in the Brinker case. I use the Brinker case all of the time in order to win workers wages in unpaid wages class action cases.
Under California law the employees are owed an hour’s pay for every meal period that isn’t provided under California law. California Labor Code Section 226.7.

Rest Breaks

Under California law, an employer has the same duty to provide rest breaks as they do meal breaks. Augustus v. ABM Security Services, Inc., 2 Cal. 5th 257, 265, (2016).

If you do not receive a legally compliant rest break you are entitled to an hour’s pay at your regular rate of pay.
California Labor Code Section 226.7.

Pay stub violations

Under California wage and hour laws, your employer has to place specific information on your pay stub/ wage statement. In essence, the pay stub has to inform you - the employee - concerning how you are being paid. You have to be able to look at the pay stub and determine how you are being paid.  
Under these facts, there are multiple pay stub violations: not putting all hours worked, not putting in net wages, not putting in the correct hourly rate, etc. California Labor Code Section 226.
If your employer does not comply with these requirements, you can recover up to $4,000 and your attorney fees and costs.

Waiting time penalties

California Labor Code Section 203 empowers a court to award “an employee who is discharged or who quits” a penalty equal to up to 30 days' worth of the employee's wages “[i]f an employer willfully fails to pay” the employee his full wages immediately (if discharged/ fired) or within 72 hours (if he or she quits). California Labor Code Section 203; see also Labor. Code Section 201(a) and Section 202(a); Caliber Bodyworks, Inc. v. Superior Court (2005) 134 Cal.App.4th 365, 378.
Under these facts, it is hard to imagine anything more willful than this employer.

Bottom Line

The award for the El Liquorida employees was $2.1 million dollars.


This happens more often than you might think. The difference is that either no investigation is conducted into these companies or ineffective investigations occur.
The workers just wanted to get paid their wages. They have bills to pay.
So when the company gets caught and the company offers to pay a lot of money to the workers that bring the case, it’s hard for the workers - that have bills to pay - to turn down the settlement. So cases get settled.
In the usual settlement, the company doesn’t admit any fault or culpability. Too often, it’s business as usual.
This company’s still in business.

You have to be trusted by the people that you lie to

 And after a while, you can work on points for style
 Like the club tie, and the firm handshake
 A certain look in the eye and an easy smile
 You have to be trusted by the people that you lie to
 So that when they turn their backs on you,
 You'll get the chance to put the knife in
 Dogs - David Jon Gilmour / Roger Waters (Pink Floyd)
In spite of the owners and managers getting caught stealing the wages from the workers, many employees came forward on the side of the company.  They were against the case from the beginning. Funny how that goes sometimes.
These “loyal” employees refused to believe that the owner (who was admittedly very charming, with “an easy smile”), had - in fact- stolen their wages.

Another comment on audit trails

It’s really hard to fool a computer. Almost all timekeeping programs keep audit trails that will indicate that time records are altered.  
The audit trails will also usually say who altered the time records. Unless, fake managers names/ numbers are used to alter the time records. We can still prove that the punch records were altered / falsified by the company - even if the “who” is still unknown. Here is a good article on what you can do if your time records have been altered

The real heroes here

The real heroes are the workers that had the guts to come forward and report that their wages weren’t paid.
They had the wherewithal to stand up and, in effect say, “I’m not going to take it anymore.” Good for them.

The story behind the story 

These are by and large Hispanic workers in this case.  Some may have questionable immigration status. 
What I see many times is the workers' wife or daughter giving the employees the encouragement to be heard. To be counted. 

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This article isn't legal advice
These discussions and/or examples are not legal advice. All legal situations are different. These testimonials, endorsements, photos and/or discussions do not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter, your particular case/ situation. Every case is different. There are any number of reasons why class actions are not certified, not won and/or PAGA actions are not successful.
Just because we have gotten great results in so many other unpaid wage cases, doesn't guarantee in particular result in other cases. Including, your wage case. Every case is different. In other words, your mileage may vary.
William Turley
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“When I seek out professional advice, I don’t want B.S., I want it straight up. I figure you do also.”
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