Jack in the Box Franchise Operator Cited for Misclassifying Workers as Exempt from Overtime

August 14, 2017

The California Labor Commissioner’s Office cited a Jack in the Box franchise operator $903,084 for misclassifying 40 managers as exempt and denying them overtime pay.

Nor-Cal Venture Group, Inc. owns 26 Jack in the Box franchises in California, most of which are in the greater Sacramento area. The Labor Commissioner’s Office opened an investigation after receiving a complaint and found that 40 employees were misclassified as exempt. As managers, they were required to work a minimum of 45 hours per week with no overtime, regardless of how many hours they worked.

“For these employees, being misclassified as managers resulted in being paid less than minimum wage,” said Labor Commissioner Julie A. Su. “That’s not an acceptable way of doing business in California, and my office will continue to enforce labor laws that uphold that wage floor.”

Managers who spend less than half of their work time on managerial duties must be paid overtime. Investigators determined that the 40 workers were performing the same duties as other employees.

The citations issued to Nor-Cal Venture Group, Inc. include $416,783 in unpaid overtime wages and penalties, $218,227 in minimum wage violations and penalties, $169,427 in liquidated damages and $98,647 in waiting time penalties for 16 of the workers, who were not paid at the conclusion of their employment. When workers are paid less than minimum wage, they are entitled to liquidated damages that equal the amount of underpaid wages plus interest.

Worker misclassification results in an estimated loss of $7 billion each year in payroll tax revenue to the state. Employees misclassified as independent contractors are also frequently underpaid and do not have on-the-job benefits and protections, including workers’ compensation coverage, family leave, unemployment insurance, the right to organize or join a union, and protection against employer retaliation.