This month the California Court of Appeal issued its decision in Garcia-Brower v. Nor-Cal Venture Group, a case that arose from an investigation into possible violations of California overtime laws by Nor-Cal Venture Group, Inc. (Nor-Cal), a company that operates fast food restaurants in the Sacramento area, the Labor Commissioner (Commissioner Garcia-Bower hereinafter the “Commissioner”) subpoenaed business records from Nor-Cal. Later, the Commissioner issued a wage citation to Nor-Cal, seeking over $900,000 in penalties and unpaid wages for alleged misclassification of about 40 restaurant managers.
Nor-Cal challenged the wage citation in an “informal” adjudicatory hearing, and while that adjudication was pending, the Commissioner issued a subpoena directing Nor-Cal’s “Person(s) Most Knowledgeable” on certain topics to testify at a deposition. When Nor-Cal refused, the Commissioner filed a petition in the trial court to compel Nor-Cal to comply. The trial court agreed with the Commissioner and ordered Nor-Cal to comply with the deposition subpoena.
Nor-Cal appealed and challenged the trial court’s order on the basis that (1) the Government Code does not contemplate parties to adjudicatory informal hearings taking depositions for the purpose of discovery; and (2) because, under the trial court’s reasoning, only the Commissioner may issue deposition subpoenas during the pendency of an informal adjudication, the trial court’s order permitting non-reciprocal discovery violates due process principles.
The Appellate Court reversed the trial court’s order and Nor-Cal did not have to comply with the deposition subpoena. It reasoned California’s overall statutory scheme regarding administrative proceedings provides for only limited discovery in connection with informal agency adjudications. So while the Commissioner has broad power to issue investigative subpoenas to a company for suspected violations of the law, that broad power ends upon initiation of adjudicative proceedings against the company.
If your business is subject to investigation by the California Labor Commissioner, it is essential that you immediately hire qualified legal counsel to help you navigate the informal adjudicatory proceedings the Commissioner may initiate.
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
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