Appellants operate several residential care facilities for the elderly. Respondents are seven former employees who worked at the facilities, and who brought administrative proceedings against appellants before the Labor Commissioner (the Commissioner) seeking unpaid wages and penalties.
Plaintiffs sought unpaid overtime wages, liquidated damages, and waiting time penalties from two residential care facilities with a sole member, Chou. A hearing officer awarded $2.5 million. Chou’s liability was $2.2 million.
The trial court allowed the defendants to file appeals conditionally, subject to being stricken if their petition to waive the bond requirement was denied. Chou submitted a declaration stating that he and the businesses lacked the financial ability to pay the awards or to make the deposit; that he had contacted bonding companies but could not provide required security; and that he was willing to provide financial statements, for the court’s in camera review, citing his bankruptcy and divorce.
Plaintiffs submitted evidence that, while the action was pending, Chou had transferred title to four residential care facilities, and another property to trusts and LLCs of which Chou’s wife was the sole manager; that the value of the four properties collectively exceeded five million dollars; and that a fifth property had been purchased for $1,050,000. Chou cited mortgage debt, claiming that the properties were transferred for “an estate plan.” Chou was not present at the hearing. The trial court stated that there were no witnesses regarding the defendants’ financial position and found Chou’s assertions not credible.
When the Commissioner awarded the employees more than $2.5 million, appellants sought de novo review in the trial court, an action that required them to post an undertaking in the amount of the award or to obtain a waiver. (Lab. Code, § 98.2;1 Code Civ. Proc., § 995.240.) The primary question we must address is whether the trial court provided an adequate hearing on appellants’ financial ability to post the undertaking.
The court rejected, as untimely, Chou’s attorney’s offer to arrange for Chou to come to court and denied the request for a waiver of the requirement of an undertaking, dismissing the appeals from the award. The trial court provided an adequate hearing, consistent with due process.
When an employer does not pay wages as required by law, an employee may file either a civil action in court or a wage claim with the Commissioner. (§§ 98-98.8.) If the employee chooses the administrative route, a deputy commissioner then holds a hearing commonly known as a “Berman” hearing. (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 121.) The Berman procedure “ ‘is designed to provide a speedy, informal, and affordable method of resolving wage claims.’ ” (Ibid.) Within ten days after service of notice of the Commissioner’s order, decision, or award, either party may appeal to the superior court, which considers the matter de novo. (§ 98.2, subd. (a); Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1116-1117 [section 98.2 proceeding is not conventional appeal or review of Commissioner’s decision, but review de novo of wage dispute].)
An escape valve exists for employers who are unable to post the necessary security: “[A] party appealing a decision of the Commissioner is entitled as a matter of due process to seek relief from the section 98.2(b) undertaking requirement. ‘The right of an indigent civil litigant to proceed in forma pauperis is grounded in a common law right of access to the courts and constitutional principles of due process. [Citations.] “[R]estricting an indigent’s access to the courts because of his poverty . . . contravenes the fundamental notions of equality and fairness which since the earliest days of the common law have found expression in a right to proceed in forma pauperis.” ’ ” (Burkes v. Robertson (2018) 26 Cal.App.5th 334, 343-344.) Thus, statutory provisions applying to all bonds include an exception for indigency. (Williams v. Freedomcard, Inc. (2004) 123 Cal.App.4th 609, 614.
Procedural “ ‘[d]ue process principles require reasonable notice and opportunity to be heard before governmental deprivation of a significant property interest.’ [Citations.] ‘However, there is no precise manner of hearing which must be afforded; rather the particular interests at issue must be considered in determining what kind of hearing is appropriate. A formal hearing, with full rights of confrontation and cross-examination is not necessarily required.’ ” (Mohilef v. Janovici (1996) 51 Cal.App.4th 267, 286.) In deciding whether due process has been satisfied, a court considers the private interest that will be affected by the official action, the risk of erroneous deprivation of that interest, the interest in informing individuals of the nature of the proceeding and enabling them to present their case to a governmental official, and the governmental interest. (Id. at p. 287.) In the statutory scheme before us, the Berman hearing is informal, while an ensuing appeal to the trial court carries with it “full due process protections.” (Corrales v. Bradstreet (2007) 153 Cal.App.4th 33, 60.)
The California Court of Appeal concluded the proceedings were adequate and comported with due process, and accordingly affirmed the trial court’s dismissal of the consolidated trial court actions. Appellants also challenge an award of attorney fees, which the Callifornia Court of Appeal affirmed.
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