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The public perception of the state labor commissioner’s office is one of a unified enforcement agency, with the labor commissioner at the top setting important enforcement policies for a staff of responsible hearing officers functioning in the labor commissioner’s name. The reality is that these hearing officers are nonlawyers deciding important legal issues, operating autonomously, often poorly, and subject to no enforceable control by the labor commissioner. The system just grew like that; it is not the fault of any one person, but it can be fixed by the labor commissioner without new legislation. California’s Labor Code authorizes the labor commissioner, chief of the Division of Labor Standards Enforcement, to conduct hearings and issue decisions on complaints for wages, penalties and other demands for compensation. The labor commissioner delegates that authority to deputy labor commissioners, referred to as “hearing officers.” There are approximately 30 to 40 hearing officers in 18 offices. They conduct 10,000 hearings a year and award approximately $50 million in backpay and penalties. Hearing officers decide the order in which hearings are conducted. They rule on what evidence will be admitted. They decide which witnesses to believe. They resolve disputed issues of fact. They also resolve disputed issues of law. Although they interpret the law, they are not attorneys. Labor commissioner hearings can raise difficult issues of law. Hearing officers interpret and apply the legal standards for determining whether an employee qualifies for executive, administrative or professional exemption from overtime, or for the outside sales exemption, or for other, sometimes arcane, exemptions. In the experience of this practitioner, DLSE hearing officers have decided whether the additional hour of pay imposed for violating meal and rest period requirements is a penalty or compensation; whether §301 of the Labor-Management Relations Act pre-empts a claim for waiting-time penalties; whether the professional exemption requires a bachelor’s degree or a master’s; and whether a defense that would, if successful, preclude finding a violation is a defense to waiting-time penalties. DLSE’s hearing officers are not qualified to make those decisions, but they do. Their decisions too often reflect ignorance of the legal principles before them. Decisions of DLSE hearing officers are issued in the name of the labor commissioner. Amazingly, the labor commissioner has no knowledge of the decisions or control over them. There is no system for decisions to be funneled to the labor commissioner. He or she does not review them. Even if the labor commissioner knew about a decision, there would be no way to disagree or change it. Employers and employees frequently telephone or write to DLSE offices to learn the law on particular subjects. Staff will usually accommodate a caller by explaining the law. At one time, DLSE’s staff of lawyers would issue written opinions. Many opinions were published. A hearing officer might be guided by a published opinion, but they are under no obligation. A private party relying on an opinion from DLSE has received nothing but an educated guess about what a hearing officer is likely to rule. Further, in Tidewater Marine Western v. Bradshaw (1996), the Supreme Court ruled that DLSE’s process of issuing opinions on rules of general application violated the Administrative Procedure Act and that such opinions were “void.” Decisions of hearing officers are mailed to the parties, but they are not published. The labor commissioner is not the only one unaware of them. The public knows nothing about them. Attorneys representing parties cannot research whether the same issues arose in earlier hearings. Most importantly, the hearing officers themselves know nothing about the decisions of their fellow hearing officers. There is nothing to prevent two hearing officers from reaching inconsistent conclusions on the same legal question. The Administrative Procedure Act permits the labor commissioner to designate decisions as “precedent decisions.” Only precedent decisions may be relied upon by hearing officers. In 2005, Donna Dell, then labor commissioner, issued the first precedent decision in the approximately 95-year history of the agency. Robert Jones, DLSE’s current acting labor commissioner, has designated three more. All four are published on the Internet. Still, the labor commissioner has no way of knowing whether a hearing officer has followed a precedent decision and no way of correcting a hearing officer who does not.
The process of designating a precedent decision is, of necessity, backwards. The labor commissioner does not know what issues are before the hearing officers or what decisions they have reached. If the labor commissioner identifies an issue that should be the subject of a precedent decision, the labor commissioner must inquire whether any hearing officer has a case that raises it. Then, the labor commissioner has to see whether the hearing officer decides the case consistently with the labor commissioner’s interpretation. If the hearing officer doesn’t, there is nothing the labor commissioner can do, except not designate that decision as precedent. There are staff attorneys in some offices. If a hearing officer wants advice on a legal dispute arising in a hearing, the hearing officer can ask a staff attorney, but it is not required. If a hearing officer does ask a staff attorney, the hearing officer is likely to accept the answer uncritically, because hearing officers are not attorneys. Thus, some cases are decided by staff attorneys, although the parties never know it. Neither does the labor commissioner. A losing party before the labor commissioner may obtain trial de novo in superior court, if the party files within 15 days and posts a bond. Many cases (but definitely not all) are too small to take to court. The parties are stuck with the decision of the hearing officer, no matter how badly it corrupts the law. Nor can they obtain internal review. The labor commissioner has no procedure for reviewing decisions and does not even know they have issued. Parties to small disputes have no choice but to accept uninformed, frequently tortured justice. If a losing party seeks trial de novo, and if the winning party accepts the decision but is unable to afford counsel, the labor commissioner must represent the winning party in court. The labor commissioner had nothing to do with deciding the case and may even disagree with it. The decision could be contrary to a published opinion. It could be contrary to one of the four precedent decisions. The labor commissioner still must represent the winning party. Thus, the head of the agency can be required to appear in court and defend a ruling with which he or she disagrees. The system generates arrogance on the part of hearing officers. Within the agency, their decisions are immune from attack, and they do not care if an occasional losing party seeks de novo review in court or even succeeds in obtaining a different ruling. They have no incentive to resolve difficult legal issues properly or to render accurate, well-reasoned decisions. They have been vested with power, and it does corrupt. Many administrative agencies, like DLSE, are authorized to conduct hearings, to make findings of fact and conclusions of law, to issue decisions, and to assess backpay or other damages. Most, unlike DLSE, use lawyers as administrative law judges. The Workers’ Compensation Appeals Board, the California Unemployment Insurance Appeals Board, the Fair Employment and Housing Commission and several labor relations boards are examples. Not only do administrative law judges conduct the hearings, but their decisions are subject to review by a board or commission that has overriding authority to correct errors and conform the law they administer to a uniform set of standards. Not at DLSE. Though the law recites that the labor commissioner decides the cases, the law is a fiction. There is one analogy closer to the labor commissioner’s model, which the labor commissioner could copy. At the National Labor Relations Board, hearing officers (who are sometimes attorneys, but not always) conduct hearings to decide the size and composition of bargaining units, who is eligible to vote in elections, and other complicated issues arising in NLRB-supervised union elections. Decisions are issued in the names of the regional directors. A hearing officer prepares a recommended decision. It is submitted to the regional director, who reviews it and has the final say. In the same manner, DLSE hearing officers could issue recommended decisions that would be submitted to the labor commissioner for final approval or correction. The labor commissioner could effect that change without legislation. The authority to conduct hearings is vested in the labor commissioner, not in the deputies. For years, the labor commissioner has delegated the authority to deputies. The labor commissioner could withdraw delegation of authority to issue final decisions and direct hearing officers to issue recommended decisions. They would not become final until the labor commissioner issued them. As presently operated, the Office of the Labor Commissioner is the saddest office imaginable. There is little or no control over the decision makers who act in the name of the labor commissioner. The labor commissioner exercises merely the power to make pronouncements and to hope subordinates will follow them. Yet, the labor commissioner is obligated to defend their decisions in court no matter how hopelessly wrong or contrary to his or her interpretation of the law. This situation is not the doing of any recent labor commissioner, Democratic or Republican. It just grew that way, but it should be fixed. Robert W. Tollen is a labor and employment partner in the San Francisco office of Seyfarth Shaw.

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