As most employers know, laws are filled with little surprises for the unwary. As part of our regular employment department meetings, we read and summarize recent court opinions and new legislation to ensure that our clients are always getting the best and most current advice. Recently we discussed a case which addressed an obscure section of the California Labor Code dedicated to car wash operators.
In People v. Sunset Car Wash, LLC (“Sunset”), Auto Spa Express, Inc. (“Auto Spa”) operated a car wash but ultimately defaulted on their property lease with the landlord. The landlord evicted Auto Spa and subsequently leased the same premises to Sunset. Prior to the sale to Sunset, Auto Spa purportedly failed to pay its employees minimum and overtime wages and also denied them their meal and rest breaks. After Sunset acquired the car wash facilities and its employees, the Attorney General of California brought an action against Sunset to hold it liable for the unpaid wages and penalties owed by Auto Spa. The Attorney General relied solely upon Labor Code Section 2050, et. seq., which imposes liability on the successor to any employer engaged in the car washing and polishing business for wage and hour violations. The trial court ultimately held that Sunset was liable for the unpaid wages and penalties incurred by Auto Spa and that ruling was subsequently affirmed by the Court of Appeal.
If you are interested in the full Court of Appeal Opinion (which lays out some interesting arguments made by Sunset) it is linked here. However, the takeaways from this opinion are three fold: (1) Generally speaking, purchasing a car wash in California exposes you to liability if your predecessor failed to comply with this state’s wage and hour laws; (2) If you are purchasing a car wash and intend on using the same facilities and the same workforce, you must undertake significant due diligence into the seller’s past compliance with California’s wage and hour laws given that you could be responsible for someone else’s bad acts; and finally (3) These types of wage and hour violations may not be readily apparent after some investigation so I would recommend seeking indemnity from the prior employer (possibly even a personal guarantee) to ensure that any prior unpaid wages are borne by the predecessor and not by you.
This blog is presented under protest by the law firm of Ervin Cohen & Jessup LLP. It is essentially the random thoughts and opinions of someone who lives in the trenches of the war that often is employment law–he/she may well be a little shell-shocked. So if you are thinking “woohoo, I just landed some free legal advice that will fix all my problems!”, think again. This is commentary people, a sketchy overview of some current legal issue with a dose of humor, but commentary nonetheless; as if Dennis Miller were a lawyer…and still mildly amusing. No legal advice here; you would have to pay real US currency for that (unless you are my mom, and even then there are limits). But feel free to contact us with your questions and comments—who knows, we might even answer you. And if you want to spread this stuff around, feel free to do so, but please keep it in its present form (‘cause you can’t mess with this kind of poetry). Big news: Copyright 2012. All rights reserved; yep, all of them.
If you have any questions regarding this blog or your life in general, contact Kelly O. Scott, Esq. (who else would you contact?), commander in chief of this blog and Head Honcho (official legal title) of ECJ’s Employment Law Department, at (310) 281-6348 or kscott@ecjlaw.com.
