California Cracks Down on Comp Fraud

As a result of a lawsuit filed by California State Labor Commissioner Donna Dell against a car wash that was "operating within the underground economy," $180,000 in wages is being distributed to nine employees who were underpaid and lacked workers' compensation coverage.

Dell filed the lawsuit last year against Charles and Daniel Moine, the owners of Rolling Hills Hand Car Wash in Palos Verdes, Calif., after a May 2003 enforcement sweep by the Division of Labor Standards Enforcement's Bureau of Field Enforcement revealed that the Moines had no proof of workers' compensation and employees were not being paid properly under California labor law.

The bureau issued a stop order to discontinue business until the owners could provide proof of workers' compensation. However, the Moines had no workers' compensation coverage, and the car wash was closed for approximately a month until they could provide the insurance, according to the California Department of Industrial Relations.

The state issued a citation for $77,000 for back wages, overtime, missed meal and rest periods and compensation for 10 days of work the employees had to forfeit when the business was closed by the stop order.

Dell was awarded $180,000 in a lawsuit filed by the Department of Industrial Relations on behalf of nine employees of Rolling Hills Hand Car Wash. The money was received by the agency in late September and, as of Oct. 5, was in the process of being distributed to the employees, the agency said.

"This is an example of justice being served for workers and legitimate employers in California," Dell said. "The Moines were operating within the underground economy with neither providing workers' compensation nor properly paying the employees, which created for them an unfair competitive advantage in the marketplace. Justice is served, the employees will get back wages owed to them and there is one less business trying to illegally undercut its competitors."

The award includes approximately $149,000 for employee wages and penalties and $31,000 to cover the cost of state attorney's fees and court costs.

The nine workers, all immigrants from Mexico and most monolingual in Spanish, worked on average between 2 and 4 years, with some working nearly 10 years.

"These employees took extraordinary steps to come forward and offer testimony at the trial in L.A. Superior Court," Dell said. She added that individual employees will receive between $5,000 and $20,000 each for unpaid wages.

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