California Labor Commissioner Nails Inventory Company, Grocers for $1.6M

Update: Inventory Professionals issued a statement disputing the Labor Commissioner’s allegations. That is now included in this article.

The California Labor Commissioner has cited Anaheim-based Inventory Professionals Inc. $1.6 million for wage theft violations affecting 64 workers.

The citations also hold Trader Joe’s and Grocery Outlet each liable for $825,813 as client employers.

Inventory Professionals Inc. workers are due $1,608,727 in minimum wages, overtime, liquidated damages and waiting time penalties. The company has also been fined $42,900 in civil penalties. All three employers have appealed the citations.

Investigators found the 64 workers, who went aisle by aisle and counted all items in more than 300 Grocery Outlet and Trader Joe’s stores statewide, worked roughly 65 hours a week during a three-year period ending in August 2018 and were not paid the minimum or overtime wages due.

The investigation also found that two minors, aged 14 and 17, worked until 2 a.m. in violation of California’s child labor laws.

Inventory Professionals owner Arun D. Gandhi is held jointly and severally liable for the full citation amount due, which includes $550,033 in unpaid minimum wages, $262,871 in unpaid overtime, $645,937 in liquidated damages and $149,885 in waiting time penalties. Inventory Professionals was also fined $1,500 for its failure to secure minors’ work permits or maintain records on the minors as required by law.

Trader Joe’s and Grocery Outlet are responsible per California’s client-employer liability law, in effect since 2015. The law holds client employers that obtain labor from a subcontractor liable for their workplace violations.

A client employer may have to pay for the subcontractor’s owed wages, damages and penalties, as well as workers’ compensation violations.

A statement issued on Thursday by Inventory Professionals notes that Gandhi has appealed the citations, calling the calculations used to penalize his company “deeply flawed” and “irresponsible,” and the commissioner’s report an abuse of the system.

“We absolutely believe in supporting and paying our workers for the work they do,” the statement reads. “But the Labor Commissioner’s calculations are irresponsible and deeply flawed. We offer workers free transportation to the job, if they need it. Now, the DIR is fining us for not paying workers for their commute time. It’s ludicrous — it feels like we are being punished for trying to be a responsible employer. We’ve already appealed the citations and are prepared to fight.”

According to the statement, the company organizes free rideshares if employees are unable to get to the job site. The labor commission used this transportation in its calculations to assess overtime claims for 64 of the company’s employees.

The investigation was initiated after workers filed labor law violation reports with the Labor Commissioner’s Office. Enforcement investigations typically include a payroll audit of the previous three years to determine minimum wage, overtime and other labor law violations, and calculate payments owed and penalties due.

When workers are paid less than minimum wage, they are entitled to liquidated damges that equal the amount of underpaid wages plus interest. Waiting time penalties are imposed when the employer intentionally fails to pay all wages due to the employee at the time of separation. This penalty is calculated by taking the employee’s daily rate of pay and multiplying it by the number of days the employee was not paid, up to a maximum of 30 days.

Civil penalties collected are transferred to the State’s general fund.