A Southern California car wash mogul cited for cheating more than 800 workers and destroying evidence will pay $4.2 million in back wages and penalties after a two-year court battle with federal authorities.
Vahid David Delrahim, of Los Angeles, failed to pay his workers minimum wage or overtime at a dozen car washes in Orange, Los Angeles, San Bernardino and Ventura counties, according to the U.S. Department of Labor.
A consent decree approved this week by U.S. District Court Judge Fernando Olguin orders Delrahim to pay $1.9 million in back wages and another $1.9 million in damages to the workers. In addition, he is fined $400,000 in civil penalties.
“This landmark case sends a powerful message that the Department of Labor will use strong law enforcement and litigation tools to protect employees and level the playing field for law-abiding employers,” said Juan Coria, the wage and hour divisions acting regional commissioner.
According to the judgment, Delrahim ordered employees, many of them Spanish-speakers unfamiliar with U.S. labor laws, to work off the clock at the beginning of each shift and to clock out, but to remain at the car washes, when business was slow. The result: numerous hours without pay.
The court-ordered back wages cover a period from 2013 to the present. More workers and more money may be added to the case, according to the 42-page decree, as “the identity of all employees who worked [at the 12 car washes] is presently unknown.”
Delrahim is required to furnish more names, addresses and workplace records—originally requested by prosecutors in 2016—within 30 days.
As a result of the judgment, some employees will receive more than $10,000 in back wages.
Delrahim, a prominent member of Southern Californias Iranian diaspora and a cousin of President Donald Trumps anti-trust chief, Makan Delrahim, owns more than 100 car washes and gas stations through Agoura Hills-based companies: Brea Car Wash & Detail Center (also known as Southwest Fuel Management), Goldenwest Solutions Group, and California Payroll Group.
“We made a business decision to end the civil litigation,” his public relations firm said in a statement. “Our decision did not admit any wrongdoing on our part, but will enable the leaders and employees of our business to focus their time and effort on business instead of a costly civil trial.”
State and federal officials bring hundreds of wage theft claims each year against California car washes, garment contractors, caregiver facilities, restaurants and construction firms—the industries with the highest number of violations.
The Delrahim case is unusual in that few wage and hour disputes end up in court. But Delrahim hired one of the nations most aggressive employer law firms, Littler Mendelson, leading to two years of court battles and more than 200,000 pages in filings, documents, depositions and testimony.
Delrahims Los Angeles-based lawyer, Rebecca Aragon, specialized in helping “companies employing Spanish-speaking work forces” with “union avoidance” and other strategies, according to her firm biography.
The case exploded into a fight over legal ethics. Shortly after the investigation began, Delrahim and Littler were notified of the duty to preserve potential evidence. Nonetheless, text messages, email accounts and videos recording workers comings and goings, which prosecutors deemed likely to prove the governments case, were destroyed.
The court sanctioned Delrahim and Littler five times for withholding documents and for coercive tactics towards employee witnesses. They were ordered to reimburse the government $23,850 in legal fees.
“The courts decisions make clear that our laws protect workers and neither an employer nor their attorneys may interfere with their rights,” said Regional Solicitor Janet Herold.
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The settlement attested to the lack of trust. It orders Delrahim not to encourage his managers “to ensure that labor costs are kept at or below a fixed percentage of the car washs sales.” And it appoints an “independent monitor” who can enter his car washes for a year without prior notice to inspect all payroll records and time cards.
The dozen illegally operated car washes include:
- Brea Car Wash & Detail Center (Brea)
- Steves Detailing (Newport Beach)
- Newport Coast Car Wash (Newport Beach)
- Placentia Car Wash (Placentia)
- Laguna Hills Auto Spa (Laguna Hills)
- Coast Hand Car Wash & Detail Center (Long Beach)
- Alicia Auto Spa & Detail Center (Laguna Hills)
- Agoura Hills Car Wash (Agoura Hills)
- Lavaggio (Agoura Hills)
- Las Posas Car Wash (Camarillo)
- Redlands Auto Spa (Redlands)
- Redlands Car Wash & Detail Center (Redlands)