Latest / Financial Survival Network / Wage Compliance & Economic Comparisons Between States - Parag Amin #6213

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Wage Compliance & Economic Comparisons Between States - Parag Amin #6213 · Financial Survival Network

• 0:00
  Speaker 1: Right, And I'm just talking about a few hours here.
• 0:02
  Speaker 2: You know, if you fail to pay them for a
• 0:03
  Speaker 2: week or two weeks or even the whole month, that
• 0:06
  Speaker 2: balloons up.
• 0:07
  Speaker 1: And so you've got huge, huge companies Walmart, Chipotle.
• 0:12
  Speaker 2: I mean you're talking about public companies with legions of
• 0:15
  Speaker 2: lawyers that have gotten into problems with failing to pay
• 0:18
  Speaker 2: minimum wage or not keeping up with all of California's
• 0:21
  Speaker 2: complex labor laws.
• 0:23
  Speaker 3: You are listening to Carrie Letz's Financial Survival Network, where
• 0:27
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• 0:31
  Speaker 3: to thrive in today's trying times. You need the Financial
• 0:34
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• 0:39
  Speaker 3: dot com and get your free newsletter and gift. Financial
• 0:43
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• 0:50
  Speaker 4: And welcome. This is Financial Survival Network. I'm your host,
• 0:54
  Speaker 4: Kerrie Lutz. Happy New Year to all. This is the
• 0:57
  Speaker 4: first show I'm recording in the new year. I mean,
• 1:01
  Speaker 4: I've only done nine thousand in the past fourteen years.
• 1:04
  Speaker 4: It's January sixth, and you know, one of the nice
• 1:07
  Speaker 4: things that happens if you're a low age employee, even
• 1:10
  Speaker 4: if you're not that low age anymore, come January First, generally,
• 1:16
  Speaker 4: many states and municipalities counties raise their minimum wage, so
• 1:21
  Speaker 4: you might have gotten a raise and you didn't even
• 1:24
  Speaker 4: know about it. If you're an employer, though, this opens
• 1:27
  Speaker 4: up a whole Pandora's box because you better be paying
• 1:31
  Speaker 4: that minimum wage and not a penny less, because if
• 1:34
  Speaker 4: you do, you could get sued. Have an expert on
• 1:39
  Speaker 4: with us now, paragu el Amin, attorney from the People's
• 1:44
  Speaker 4: Republic of California, and I mean it's great to have
• 1:49
  Speaker 4: you on the show. So you're a fast food restaurant
• 1:54
  Speaker 4: and you forget to increase your staff's pay because you
• 2:02
  Speaker 4: know the bookkeeper missed it, and you don't do it
• 2:05
  Speaker 4: for like a month. What can happen to you for
• 2:08
  Speaker 4: not paying the state minimum wage in the place like California?
• 2:12
  Speaker 2: Ok, you could be looking at closing doors. I mean
• 2:15
  Speaker 2: it is severe. So if you fail to pay minimum wage,
• 2:18
  Speaker 2: what can happen for any time work? What can happen
• 2:22
  Speaker 2: is you owe them the minimum wage. You're going to
• 2:23
  Speaker 2: owe them back pay for every day that you failed
• 2:26
  Speaker 2: to pay them, plus interest, and if they sue, you
• 2:31
  Speaker 2: have to pay their attorney's fee. So let's say for
• 2:34
  Speaker 2: every thousand dollars you fail to pay an employee. Per employee,
• 2:38
  Speaker 2: you're probably realistically looking at after even the first month,
• 2:43
  Speaker 2: at least three to five thousand dollars that you're going
• 2:46
  Speaker 2: to pay per employee.
• 2:47
  Speaker 4: Per employee, Oh my god, you got like thirty forty
• 2:50
  Speaker 4: of them that could put you under.
• 2:52
  Speaker 1: Right, And I'm just talking about a few hours here.
• 2:54
  Speaker 2: You know, if you fail to pay them for a
• 2:56
  Speaker 2: week or two weeks or even the whole month, that
• 2:58
  Speaker 2: balloons up.
• 2:59
  Speaker 1: And so so you've got huge, huge companies Walmart, Chipotle.
• 3:04
  Speaker 2: I mean you're talking about public companies with legions of
• 3:07
  Speaker 2: lawyers that have gotten into problems with failing to pay
• 3:10
  Speaker 2: minimum wage or not keeping up with all of California's
• 3:14
  Speaker 2: complex labor laws.
• 3:15
  Speaker 4: Yeah, so if you forget to pay them for lunch,
• 3:18
  Speaker 4: because if they work through their lunch, that's like another
• 3:21
  Speaker 4: hour you got to pay them for it, right, And
• 3:23
  Speaker 4: if you don't pay them for lunch, you got a
• 3:26
  Speaker 4: whole plethora of potential liabilities there too.
• 3:30
  Speaker 2: Right.
• 3:30
  Speaker 1: Yeah, so you've got two issues.
• 3:32
  Speaker 2: One, they work through their lunch break and let's say
• 3:34
  Speaker 2: you didn't pay them, Well, that's a meal missed meal
• 3:37
  Speaker 2: and rest break, which is a penalty. And then you
• 3:40
  Speaker 2: can have a failure to pay for the time, which
• 3:43
  Speaker 2: is a different penalty and different interests.
• 3:44
  Speaker 1: So you can get hit twice in the same violation.
• 3:47
  Speaker 4: And there's like companies out there that haven't been paying
• 3:49
  Speaker 4: their workers for years, right for these breaks.
• 3:53
  Speaker 1: Yeah, that's right.
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  Speaker 2: And then so what happens then is, so we just
• 3:56
  Speaker 2: talked about this example, they worked through the lunch, you
• 3:58
  Speaker 2: didn't pay them for the lunch, you didn't give them
• 4:02
  Speaker 2: their meal.
• 4:03
  Speaker 1: And rest break. That's a violation.
• 4:04
  Speaker 2: Now the wage statement you gave them and is inaccurate,
• 4:08
  Speaker 2: which is another violation.
• 4:10
  Speaker 1: So as you can see, these things balloon up.
• 4:12
  Speaker 2: And so what happens is California enacted the Private Attorney
• 4:16
  Speaker 2: General Act, and so the way that works is private
• 4:20
  Speaker 2: attorneys are essentially deputized to be able to bring these
• 4:23
  Speaker 2: lawsuits on behalf of the state of California against employers,
• 4:27
  Speaker 2: including huge ones like Walmart, Chipotle, et cetera.
• 4:30
  Speaker 1: And so what happens is the state.
• 4:33
  Speaker 2: Also gets a huge windfall of money from the recovery,
• 4:38
  Speaker 2: over half for penalties, and a percentage of that goes
• 4:41
  Speaker 2: to employees, the aggrieved employees, the ones who were actually wronged.
• 4:46
  Speaker 1: And then the government keeps the rest.
• 4:48
  Speaker 2: And the benefit to the state is obviously not only
• 4:51
  Speaker 2: does it get this money, but also it didn't have
• 4:54
  Speaker 2: to spend any money to get it because it deputized the.
• 4:57
  Speaker 1: Private attorneys doing all the work to go get it.
• 5:00
  Speaker 4: Oh goodness, why does anybody have a business in California.
• 5:04
  Speaker 4: That's what I would like to understand.
• 5:07
  Speaker 2: Well, California is still one of the top economy in
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  Speaker 2: the in the country, the biggest economy it is. It's
• 5:14
  Speaker 2: higher than many other countries around the world. So from
• 5:17
  Speaker 2: an economic strength perspective, I think it comes down to
• 5:20
  Speaker 2: the sheer population that California has, combined with the weather.
• 5:25
  Speaker 2: If it didn't have both of those things, I think
• 5:28
  Speaker 2: that California would get heavily punished for its policies.
• 5:32
  Speaker 1: M M yeah, so.
• 5:35
  Speaker 4: Yeah, Well, but you know, the states that don't penalize
• 5:39
  Speaker 4: their businesses are growing five times faster than the states
• 5:43
  Speaker 4: like California, New York, Illinois. You know, any blue state
• 5:47
  Speaker 4: you could point your finger at is is growing slower
• 5:53
  Speaker 4: than the top red states. So here we have the
• 5:56
  Speaker 4: top five by GDP states California three point three trillion,
• 6:01
  Speaker 4: Texas one point eight seven trillion, all right, and Texas
• 6:06
  Speaker 4: has roughly thirty million people, California has got forty million,
• 6:12
  Speaker 4: New York one point five six, Florida is number four
• 6:16
  Speaker 4: at one point one point one in Illinois eight seventy five.
• 6:19
  Speaker 4: So of those states to the top five, the two
• 6:24
  Speaker 4: that have grow in the fastest are the ones that
• 6:27
  Speaker 4: hassle their businesses the least.
• 6:29
  Speaker 2: That's I mean, there's certainly something to be said about that, Carrie.
• 6:31
  Speaker 2: I think that there should be a balance. I mean,
• 6:34
  Speaker 2: even in the numbers that we just heard, you still
• 6:37
  Speaker 2: hear that the California is almost twice that of Texas,
• 6:40
  Speaker 2: even though the population isn't twice. So there is an
• 6:44
  Speaker 2: aspect of doing business in California there is I refer
• 6:48
  Speaker 2: to it as the weather tax. A lot of people
• 6:49
  Speaker 2: want to be here. Both are the ocean, enjoy the
• 6:52
  Speaker 2: nice California weather. But again I think that there's there's
• 6:55
  Speaker 2: limitations to what businesses and people are willing to put
• 6:59
  Speaker 2: up with. And we've seen a large exodus of businesses
• 7:02
  Speaker 2: from California due to California's policies.
• 7:05
  Speaker 4: Yeah, you know in Florida. Here they say the wage
• 7:09
  Speaker 4: rates are lower than elsewhere in the country. They say
• 7:12
  Speaker 4: you get paid in sunshine in Florida. And in addition,
• 7:17
  Speaker 4: though we have no state income tax and companies pay
• 7:23
  Speaker 4: a smaller income tax. And you know, our government is
• 7:28
  Speaker 4: less than our budget is less than half of New
• 7:31
  Speaker 4: York States government budget, So a lot of that GDP
• 7:34
  Speaker 4: could be artificially inflated by government expenditures because in California
• 7:40
  Speaker 4: you got the highest taxes in the country, you got
• 7:42
  Speaker 4: the highest paid government workers, all these things. But getting
• 7:46
  Speaker 4: back to our main topic here, you know you're basically
• 7:50
  Speaker 4: a target. Do you just pay more than the minimum
• 7:52
  Speaker 4: wage so you don't have to worry about it? Is
• 7:54
  Speaker 4: that what you look to do here? That won't get
• 7:58
  Speaker 4: you for the breaks or like they had wash up
• 8:01
  Speaker 4: time where you wouldn't pay the employee for five minutes
• 8:04
  Speaker 4: while they got their aprons on and their hats, and
• 8:08
  Speaker 4: then the state figured out you should have been paying
• 8:11
  Speaker 4: them for that, and that turns into like a huge liability.
• 8:15
  Speaker 4: Is there any way to avoid all this short of
• 8:17
  Speaker 4: moving out.
• 8:18
  Speaker 1: Of the state.
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  Speaker 2: No, So what you have to do is, you know,
• 8:21
  Speaker 2: it's an interesting question because the question is that, well,
• 8:24
  Speaker 2: if I pay more than minimum wage, then do I
• 8:26
  Speaker 2: get out of this issue of failure to pay minimum wage,
• 8:29
  Speaker 2: And the short answer is maybe, but not really, because
• 8:32
  Speaker 2: you get out of one potential problem, which is the
• 8:35
  Speaker 2: issue of failure to pay minimum wage is failure to
• 8:37
  Speaker 2: pay minimum wage for all time worked. Now, if somebody
• 8:40
  Speaker 2: works an hour and they weren't paid, that's still a
• 8:42
  Speaker 2: failure to pay minimum wage for that hour. So there's
• 8:44
  Speaker 2: that issue, and then you've got a broader issue of
• 8:50
  Speaker 2: the penalties in interest are calculated based on what the
• 8:54
  Speaker 2: person should have been paid, which can become a complex
• 8:57
  Speaker 2: calculation based on the regular time plus potentially overtime and
• 9:01
  Speaker 2: bonuses and incentive comp So you could still potentially end
• 9:06
  Speaker 2: up paying way more just because you're paying the person more.
• 9:10
  Speaker 2: Meaning said differently, if you're paying the minimum wage, your
• 9:13
  Speaker 2: penalties and interest, et cetera, would be based on that
• 9:16
  Speaker 2: minimum wage. But if you're paying them a higher wage,
• 9:19
  Speaker 2: and those numbers are going to be based off that,
• 9:22
  Speaker 2: so you're going.
• 9:22
  Speaker 1: To be looking at an overall larger number.
• 9:24
  Speaker 2: So to answer your question, carry the best thing to
• 9:26
  Speaker 2: do is just to ensure you're in compliance, which is
• 9:29
  Speaker 2: very very difficult to do, but it's absolutely necessary because
• 9:33
  Speaker 2: the penalties and the repercussions are so high.
• 9:35
  Speaker 4: Can you can you do an audit to figure out
• 9:38
  Speaker 4: if you're screwing up here, and then you go correct
• 9:42
  Speaker 4: it on your own so you don't have to worry
• 9:44
  Speaker 4: about someone coming after you.
• 9:46
  Speaker 1: Absolutely, So it's a double edged sword.
• 9:48
  Speaker 2: And I've had clients do this because being an attorney
• 9:50
  Speaker 2: who helps a lot of business owners with employment and
• 9:53
  Speaker 2: business dispute matters, we have clients who will come in
• 9:56
  Speaker 2: with this issue. And here's the concern that comes up
• 9:58
  Speaker 2: a lot of times is you'll have people who have
• 10:01
  Speaker 2: built these companies where, for example, some people really prefer
• 10:05
  Speaker 2: to be ten ninety nines.
• 10:07
  Speaker 1: So they say, look these workers.
• 10:09
  Speaker 2: Maybe it's trucking, maybe it's the cleaning business, but regardless
• 10:13
  Speaker 2: of what industry it's in a lot of times people
• 10:17
  Speaker 2: prefer to be ten ninety nines and that way they
• 10:19
  Speaker 2: can write off certain expenses, et cetera. But the problem
• 10:22
  Speaker 2: with it is California has a very strict rule with
• 10:25
  Speaker 2: who is considered an employee. And there's something called AB
• 10:29
  Speaker 2: five Assembly Bill five that was passed that severely restricts
• 10:33
  Speaker 2: who can be considered an independent contractor. And so one
• 10:37
  Speaker 2: of the requirements has none of the requirements rather have
• 10:41
  Speaker 2: anything to do with what the employer wanted or what
• 10:45
  Speaker 2: the other person wanted, the independent contractor or the employee,
• 10:48
  Speaker 2: that's not really considered and so it's almost impossible to
• 10:51
  Speaker 2: pass that three point test.
• 10:52
  Speaker 4: Yeah, like Uber drivers are now considered employees, right, well.
• 10:57
  Speaker 2: So there is a special exemption to that. They would
• 10:59
  Speaker 2: have been yes, but then there was a proposition that
• 11:01
  Speaker 2: was passed to allow them to continue operating in that manner.
• 11:04
  Speaker 2: But Uber and Lyft spent a tremendous amount of money,
• 11:09
  Speaker 2: talking about billions and billions of dollars to help get
• 11:12
  Speaker 2: that proposition passed. But everybody else who's not Uber and
• 11:16
  Speaker 2: who's not Lyft in this ride share economy business, they're
• 11:19
  Speaker 2: stuck with this with Assembly Bill five because the three
• 11:21
  Speaker 2: part test is they have to have an independently established business,
• 11:25
  Speaker 2: they have to be in a business that's different than yours,
• 11:28
  Speaker 2: and they.
• 11:28
  Speaker 1: Have to be free from your direction and control.
• 11:30
  Speaker 2: All three of those things have to be true for
• 11:32
  Speaker 2: them to actually be considered an independent contractor. And if
• 11:35
  Speaker 2: they're not passing that test, then they're an employee. And
• 11:38
  Speaker 2: what happens is if you ten ninety nine them, you've
• 11:40
  Speaker 2: got all the things that we just talked about, including
• 11:44
  Speaker 2: failure to pay overtime, which by the way, in California
• 11:46
  Speaker 2: is if you go over forty hours a week or
• 11:49
  Speaker 2: over eight hours in a day.
• 11:50
  Speaker 1: So a lot of people get that wrong. Or if
• 11:52
  Speaker 1: you've got a situation.
• 11:53
  Speaker 2: Where they missed a meal or rest break, you've got
• 11:57
  Speaker 2: a problem there. If you didn't pay minimum way for
• 12:00
  Speaker 2: all the time, you've got a problem there. And then
• 12:02
  Speaker 2: of course you've got all your attorneys fees, and then
• 12:04
  Speaker 2: you've got PAGA that we just talked about, which a
• 12:06
  Speaker 2: lot of employers don't realize. And what happens is they're
• 12:09
  Speaker 2: doing this across scale, multiple people. And so recently we
• 12:13
  Speaker 2: settled a PAGA case for a client where they were
• 12:17
  Speaker 2: doing everything right, including or seemingly at least they thought,
• 12:21
  Speaker 2: including their people are making six figures a year, carry
• 12:24
  Speaker 2: six figures.
• 12:24
  Speaker 1: A year, six figures.
• 12:25
  Speaker 4: They're not exactly the people who are being exploited by
• 12:31
  Speaker 4: the evil business owners here, that's right.
• 12:34
  Speaker 2: Yeah, And at the end of the day, you know,
• 12:35
  Speaker 2: it's the business owners who are barely making it. They
• 12:37
  Speaker 2: take all the liability the risk to create this business.
• 12:41
  Speaker 2: And the reality is in California, the individual business owner
• 12:45
  Speaker 2: is responsible for unpaid wages meaning you cannot just bankrupt
• 12:50
  Speaker 2: the business out of it. You cannot close the business
• 12:52
  Speaker 2: and not have to pay it. You're personally responsible. And
• 12:55
  Speaker 2: to add to that, when it comes to PAGA penalties,
• 12:58
  Speaker 2: those you cannot even discharge it bankruptcy. They follow you
• 13:01
  Speaker 2: forever because they're considered government penalties that you as a
• 13:06
  Speaker 2: matter of public policy and law, you can't get out
• 13:09
  Speaker 2: of government penalties by declining bankruptcy.
• 13:11
  Speaker 1: That's nuts.
• 13:12
  Speaker 4: All right? Well, I guess an ounce of prevention is
• 13:15
  Speaker 4: worth many hundreds of thousands of dollars of cure. And
• 13:20
  Speaker 4: people want to find out more about your parrogue, how
• 13:23
  Speaker 4: you can help them in these situations. How did they
• 13:26
  Speaker 4: contact you? How did they connect with you on the web?
• 13:28
  Speaker 2: Yeah, my pleasure to help them carry They could reach
• 13:31
  Speaker 2: out to me at www dot l awpla dot com.
• 13:35
  Speaker 2: That's www dot law pla dot com. And they can
• 13:39
  Speaker 2: find me on Instagram or we've got a TikTok.
• 13:43
  Speaker 1: Now it's Pa r A G. So my first name Perogue,
• 13:47
  Speaker 1: last name Ami A M I n ESQ.
• 13:51
  Speaker 4: All right, excellent. Well, being a solopreneur, I have some contractors,
• 13:56
  Speaker 4: but I'm here in Florida, so I don't have to
• 13:58
  Speaker 4: worry about California. I would move if I lived in California.
• 14:03
  Speaker 4: I don't care about the weather or whatever. It's almost
• 14:05
  Speaker 4: as good here in Florida. Sometimes it's better, sometimes it's
• 14:09
  Speaker 4: a little worse in the summer.
• 14:11
  Speaker 1: Whatever.
• 14:12
  Speaker 4: I've got a question for Parrogu or myself, email klatcarrieluts
• 14:16
  Speaker 4: dot com. You'll find a link to Prague's site in
• 14:19
  Speaker 4: the show notes of this interview on Financial Survival Network
• 14:23
  Speaker 4: dot com and just ask when you go there, sign
• 14:26
  Speaker 4: up for your free newsletter. Like over sixty thousand other
• 14:30
  Speaker 4: FSN community members have prog really appreciate you coming on.
• 14:34
  Speaker 1: We'll talk to you again, so always a pleasure.
• 14:36
  Speaker 3: Thank you, thanks for listening to Carrie Letz's Financial Survival Network,
• 14:40
  Speaker 3: your solution to today's trying times. For the latest, go
• 14:44
  Speaker 3: to Financial Survivalnetwork dot com. Financial Survival Network now more
• 14:50
  Speaker 3: than ever