Understanding California’s Strict Wage Theft Enforcement

Part of the California Department of Industrial Relations (DIR), the Labor Commissioner’s Office (also known as the Division of Labor Standards Enforcement) enforces California’ wage and hour laws, including targeting industries that tend to employ relatively low-paid and unskilled workers, who are perceived as more vulnerable targets of wage theft, such as:

• Restaurants;
• Garment manufacturers;
• Security guard services;
• Car washes;
• Construction jobs; and
• Agriculture.

Last year, the Labor Commissioner’s Bureau of Field Enforcement (BOFE), which is responsible for investigating group claims for wage and hour violations, issued more than 4,800 notices to discontinue labor law violations as well as corrected violations that impacted over 57,000 California workers. Wage theft is near the top of the DIR’s enforcement agenda; employers need to make certain that they are complying with wage-and-hour laws.

DIR Enforcement

Generally, “wage theft” refers to violations of the California Labor Code involving the payment of wages to workers, for example:

• Not paying for all hours worked;
• Not paying overtime to nonexempt employees;
• Not providing applicable meal, rest and/or preventative cool-down breaks (if covered by heat illness prevention standards);
• Not paying at least minimum wage; or
• Witholding employees’ tips.

The DIR has many tools to help combat wage theft. For example, it can enforce judgments against employers who don’t pay wages, including by issuing bank levies. In cases of egregious wage theft, it works alongside local district attorneys to criminally prosecute offenders. A 2022 law makes wage theft “grand theft” if it’s more than $950 per year. Prior to this law, wage theft was classified only as a misdemeanor — grand theft can be prosecuted as either felony or misdemeanor.

Notably, properly classified independent contractors are not within the Labor Commissioner’s jurisdiction, but it will aggressively pursue employers that misclassify workers as independent contractors. Willful misclassification occurs when an employer knowingly and improperly classifies actual employees as independent contractors to avoid providing:

• Paid sick days;
• Workers’ compensation;
• Minimum wage; and
• Health benefits.

Misclassification of employees as independent contractors is a form of fraud that the DIR takes seriously.

The DIR’s Bureau of Field Enforcement (BOFE) conducts onsite inspections and assists employers in complying with the Labor Code and IWC orders. The BOFE has issued almost 2,100 citations against employers for labor law violations between January 2022 and August 2025, recovering over $43.7 million of unpaid wages, penalties and interest on behalf of workers.

Finally, the Labor Commissioner frequently combats wage theft through outreach campaigns. In 2020, it launched a multi-pronged outreach campaign, “Reaching Every Californian,” which directs outreach efforts to both employers and employees. Plus, the DIR’s Wage Theft Is a Crime website includes its public awareness campaign, explanations of labor laws, and describes how employees can file claims for unpaid wages.

Recent Enforcement Activity

In the last year, the Labor Commissioner has taken various actions against California employers for wage theft that have resulted in steep penalties, including:

• The Labor Commissioner’s office settled with a large Sana Maria-based agricultural company for $6.175 million. According to the DIR, the company had engaged in various wage-and-hour violations, affecting more than 10,000 agricultural workers. Among those violations, the company failed to provide legally required paid sick leave, not paying workers at least minimum wage and failing to pay overtime. The Labor Commissioner’s investigation also found that during the early days of the COVID-19 pandemic, the employer failed to provide workers with the legally required written notice of available paid sick leave and COVID-19 supplemental paid sick leave and, without knowing how much sick leave they had, some employees came to work sick, increasing the risk of COVID-19 transmissions. In some cases, H-2A workers believed to have COVID-19 were quarantined in crowded employer-provided motel rooms.
• The Labor Commissioner’s office settled with a Newport Beach luxury car wash for $1.2 million for failing to pay workers for all hours worked, including overtime. Employees were also prevented from taking uninterrupted meal and rest breaks and required to remain on-site without pay during slow business hours. This settlement affected 23 employees, including some who had worked there for up to 20 years. The Labor Commissioner’s investigation confirmed a pattern of underpayment and a failure to maintain accurate payroll records.
• A Labor Commissioner’s investigation revealed that several connected janitorial companies denied workers minimum and contract wages, overtime pay, and meal and rest breaks as well as failed to provide accurate wage statements. Investigators found that pay stubs were incomplete, lacking required information such as hourly rates, total hours worked and deductions. In several cases, workers were not paid all wages owed at the end of their employment. The companies were cited for $438,204 in wage theft violations.
• A restaurant in LA’s Koreatown was cited for wage theft, resulting in fines of over $680,238. During the inspections, the BOFE determined that the restaurant frequently failed to pay employees their full wages due, didn’t provide required meal and rest breaks, and gave employees inaccurate wage statements. The restaurant also required employees to remain on the premises during meal breaks to assist customers and failed to provide premium pay for employees working spilt shifts.

Employer Takeaways

Several wage-and-hour areas can trip up unwitting employers. Keep these practices in mind:

• At the time of hire, give nonexempt employees a Wage Theft Act Notice to Employees (Labor Code section 2810.5), containing certain wage and employment information.
• The Workplace Know Your Rights Act requires employers to distribute a new written notice to each employee with information about their rights under various state and federal laws.
• Provide employees with a written itemized wage statement with each paycheck. The itemized wage statement must contain specific information and must be kept for at least three years.
• Pay discharged employees all their wages, including accrued vacation, immediately at the time of termination.
• Ensure that all workers are taking their required meal and rest breaks, including cool-down breaks if covered by California’s outdoor or indoor heat illness prevention standards.
• Exercise caution when classifying workers as independent contractors. Generally, California uses a strict three-part “ABC test” to determine independent contractor status under the Labor and Unemployment Insurance Codes, and employers must meet these strict requirements.
• Lastly, employers must be aware of another misclassification issue — exempt status. Certain employees may be exempt from many wage and hour requirements, including overtime pay, tracking their time and being provided meal and rest breaks. But properly classifying employees as exempt in California can be challenging as employees must meet strict salary and duties tests to be treated as exempt.