If you are an employer, having a wage claim filed with California’s Division of Labor Standards Enforcement (“DLSE”) can be the start of a long and unpleasant process. The first notice an employer receives of a wage claim is often in the form of a “Notice of Pre-Hearing Conference.” Did you know Labor Code section 98 requires the Labor Commissioner to notify an employer within 30 days of the filing of a complaint that a claim is pending and whether a hearing will be held?
It’s true. Labor Code section 98 states in part:
Within 30 days of the filing of the complaint, the Labor Commissioner shall notify the parties as to whether a hearing will be held, whether action will be taken in accordance with Section 98.3, or whether no further action will be taken on the complaint.
(Labor Code § 98(a).) A notice of a pre-hearing conference issued more than 30 days after a claimant signs their DLSE Form 1 is “not properly before the commissioner” under section 98, is issued in the absence of any statutory authority, is issued pursuant to DLSE underground regulations in violation the Administrative Procedure Act, and is also likely a nullity issued in violation of the recipient’s rights to due process of law.
As the Supreme Court explained in Cuadra v. Millan (1998) 17 Cal. 4th 855, 868 (overruled on other grounds by Samuels v. Mix (1999) 22 Cal. 4th 1):
It is unclear why the Labor Commissioner cannot comply with [his] statutory duty to investigate a claim and also with [his] duty to inform the employer of the pendency of a claim. Both duties are clearly mandated by section 98. Section 98 vests the Labor Commissioner with the authority to investigate employee complaints. It also requires the Labor Commissioner to notify the parties within 30 days of the filing of a complaint whether a Berman hearing will be held…(§ 98, subd. (a).) Nothing in the statute grants the Labor Commissioner authority to delay notifying the employer of a potential claim until [he] has completed an investigation.
(Id., emphasis added.)
If you weren’t familiar with section 98 before reading this, you are in good company: the DLSE and the Labor Commissioner still don’t seem to be familiar with its mandates either. Even with a controlling opinion from the Supreme Court on hand for the last twenty years, the Labor Commissioner continues to use a set of procedures that violate Labor Code section 98’s clear deadlines.
The Labor Commissioner has known these policies violate Labor Code section 98 since 1998. The Supreme Court took great lengths in Cuadra to explain how DLSE’s policy of violating section 98 was “an abuse of discretion and not entitled to deference” (Id. at 870.) The specific policy in violation of section 98 at issue in Cuadra was the DLSE’s practice of calculating backpay from the date of the hearing. (Id. at 869-870.) As quoted above, Cuadra also viewed the DLSE’s policy of failing “to notify the parties within 30 days of the filing of a complaint whether a Berman hearing will be held…” (Id. at 868.) as a violation of Section 98.
Likewise, Cuadra viewed the Labor Commissioner’s policy of failing to notify parties of the pendency of a claim within 30 days of receiving an employer’s claim as a violation of Section 98:
Nor does the statute require the commissioner – as he now contends – to notify the employer “immediately” on receipt of the employee’s claim; rather, it allows him 30 days for the purpose. As the Court of Appeal correctly observed, notice to the employer within the statutory 30-day period “gives the employer the opportunity to preserve evidence and prepare for the hearing. The employer, thus, is not unfairly prejudiced.” And in any event it appears to be the practice of DLSE to notify employers in much less than 30 days in order to schedule the settlement conference.
(Id. at 868 citing 1 Wilcox, Cal. Employment Law (1997) § 5.12, p. 5-24.) Cuadra also critiqued DLSE’s policy of defining the “date of the filing of a claim” the date on which the agency caused a claimant to complete and submit a “Complaint” form following a pre-hearing conference:
If a settlement is not reached at the conference, DLSE prepares and causes the employee to execute and file the above mentioned “Complaint” form (DLSE 530). The commissioner treats this form as finally initiating the complaint process referred to in the statute. As noted above, the code requires that “Within 30 days of filing of the complaint, the Labor Commissioner shall notify the parties as to whether a hearing will be held” (§ 98, subd. (a)); and although the code draws no such distinction, “According to its Operations and Procedures Manual, the DLSE treats the date of the ‘complaint’ form (DLSE 530) and not the date of the filing of the claim (DLSE 1) as the significant date for purposes of the 30-day time limit for action set forth in Labor Code section 98(a).
(Id. at 861 citing 1 Wilcox, Cal. Employment Law (1997) § 5.10, p. 5-17.) Cuadra later specifically interpreted the phrase “the date of the claim of filing” to be “the date on which the employee first presents his written claim or complaint to the DLSE, however the agency labels that form.” (Id. at 864, fn. 9.)
Cuadra also notes the provision of Labor Code section 98 that:
Within 30 days of the filing of the complaint, the Labor Commissioner shall notify the parties as to whether a hearing will be held…If the determination is made by the Labor Commissioner to hold a hearing, the hearing shall be held within 90 days of the date of that determination.” (§ 98, subd. (a).)
(Id. at 860.) Even after Cuadra, and apparently still today, DLSE “takes the position that a decision to hold a hearing pursuant to Section 98(a) is not made until after a voluntary conference is held.” Under this interpretation, the 90-day period for deciding to hold a hearing runs from the day following a pre-hearing conference.
Simas & Associates continues to regularly encounter DLSE wage claims “filed,” investigated, and noticed in violation of Labor Code section 98 and Cuadra. For example, we recently represented two separate employers who both received their first notice of the pendency of a wage claim via Notice of a Pre-Hearing Conference.
In the first case, the claimant filed their complaint (DLSE form 1) 45 days before the DLSE sent a Notice of Claim and 113 days before the DLSE sent a Notice of Hearing. Perplexingly, DLSE marked the front of the DLSE form 1 as “filed” more than two months before the date of the complainant’s signature on the form. In any event, this hearing and the DLSE investigation of the claim prior to the Notice of Hearing were conducted in clear violation of Labor Code section 98 and the Supreme Court’s guidance in Cuadra.
In the second case, the claimant filed their complaint (DLSE form 1) 162 days before the DLSE sent a Notice of Claim and 325 days before the DLSE sent a Notice of Hearing. Once again, DLSE somehow saw fit to mark the DLSE form 1 as “filed” before the claimant completed the form by signing it. The front of the DLSE form 1 was marked as filed five months before the date of the complainant’s signature on the form. Similarly, the hearing and the DLSE investigation of the claim prior to the Notice of Hearing were conducted in clear violation of Labor Code section 98 and the Supreme Court’s guidance in Cuadra.
Labor Code section 98 can be the foundation of a powerful defense to many DLSE wage claims. However properly asserting these defenses in the appropriate context at the right time requires a certain expertise with administrative hearings as well as the strategic use of writs of mandate. Simas & Associates has significant experience with writs of mandate and wage complaints.
 Even if DLSE’s Enforcement and Policy Manual declines to cite this rule. (https://www.dir.ca.gov/dlse/DLSEManual/dlse_enfcmanual.pdf.)
 A “Notice of a Pre-Hearing Conference” is of course distinct from notice of an actual Berman hearing and is not a procedure contemplated by any statute relevant to the Labor Commissioner’s ability to hear wage claims. See X “These conferences are not directly regulated by statute and are not mandatory. Rather, the employee and the employer are simply invited to attend on a voluntary basis.” (Simmons, Wage and Hour Manual for California Employers (14th ed. 2010) § 15.4 at p. 686.) See also Post v. Palo/Haklar & Assoc. (2000) 23 Cal.4th 942 stating:
Within 30 days of the filing of a complaint, the commissioner must notify parties as to whether he or she will take further action. (Id., § 98, subd. (a).) The statute provides for three alternatives: the commissioner may either accept the matter and conduct an administrative hearing (see id., §§ 98-98.2), prosecute a civil action for the collection of wages and other money payable to employees arising out of an employment relationship (see id., § 98.3), or take no further action on the complaint. (Id., § 98, subd. (a).)
 Labor Code § 98 limits the Labor Commissioner to holding hearings in matters “properly before the division of the Labor Commissioner…”
 Cuadra v. Millan (1998) 17 Cal. 4th 855, 868 at fn. 10 (overruled on other grounds by Samuels v. Mix (1999) 22 Cal. 4th 1) noting:
The Administrative Procedure Act (APA) (Gov. Code, § 11340 et seq.) mandates the procedures that state agencies must follow in adopting regulations. In Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 568-576 [59 Cal.Rptr.2d 186, 927 P.2d 296] (Tidewater), we held that (1) the DLSE is an agency subject to the APA and (2) a certain DLSE policy (interpreting wage orders of the Industrial Welfare Commission) that had been formalized in its operations and procedures manual was a regulation subject to the APA and was therefore void because it was not adopted in compliance with APA procedures. The case at bar was filed and tried before we decided Tidewater. Although in their petition for writ of mandate plaintiffs alleged as a matter of fact that the DLSE policy here challenged was not adopted pursuant to the APA, they did not contend the policy was void on that ground and did not introduce any evidence in support of the allegation; the trial court did not grant the writ on that ground; and the issue was not raised in either the briefs or oral argument in this court. In these circumstances the issue is not properly before us, and nothing we say in this opinion is intended to address the effect of Tidewater on the policy here challenged.
 (American Motors Sales Corp. v. New Motor Vehicle Bd. (1977) 69 Cal. App. 3d 983.)
 Simmons, Wage and Hour Manual for California Employers (14th ed. 2010) § 15.4 at p. 685, fn. 39.
 The Labor Commissioner Regulation, Code of Regulations, Title 8, section 13501.5, requires a claim “properly before” the Labor Commissioner under Labor Code section 98(a) to be “initiated by the filing of a complaint on the form prescribed herein…” Code of Regulations, Title 8, section 13501.6 requires a complaint under Labor Code section 98(a) to be “substantially in the following form” and the only signature line on the required form requires the claimant to certify “under penalty of perjury that the foregoing is true and correct to the best of his/her knowledge and belief.”