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October 6, 2011

The California State Labor Commissioner filed a lawsuit Sept. 26 seeking more than $17 million from ZipRealty Inc., to recover unpaid minimum wages and overtime pay for hundreds of real estate agents throughout California, the California Department of Industrial Relations announced Sept. 26 (State Labor Comm’r v. Ziprealty Inc., Cal. Super. Ct., No. 11596987, complaint filed 9/26/11).

The industrial relations department alleges that ZipRealty, which is based in Emeryville, Calif., violated state law during the four-year period of May 2006 through August 2010 by paying its real estate agent employees less than the minimum wage and no premium for overtime hours worked. California has an hourly minimum wage of $8.00.

“This lawsuit involving career real estate agents highlights a rapidly changing economy and labor market,” according to Christine Baker, the department’s acting director. “Wage compression and violations of the minimum labor standards are now occurring in a wide variety of occupations, even affecting employees outside traditional low-wage occupations,” she said.

The lawsuit seeks minimum wages in excess of $7.5 million, overtime of $1.25 million, and damages and penalties in excess of $9 million.

 “This enforcement is important not just for employees, but for hardworking employers who shouldn’t have to compete against lawbreakers,” according to Labor Commissioner Julie Su. “Employers who don’t play by the rules should be prepared to face the consequences of paying twice the amount of wages owed, as well as penalties and interest,” Su said.

This lawsuit follows an administrative wage action brought by four former ZipRealty agents from Bakersfield, Calif. The labor commissioner awarded them a combined total of $75,000, and ZipRealty appealed to Kern County Superior Court, where Judge Stephen Schuett issued a decision Sept. 1 quadrupling the amounts previously awarded the agents to more than $330,000 in damages and interest.

ZipRealty had asserted that it did not have to pay its agents the minimum wage or overtime premium because they were exempt outside sales agents, but Schuett concluded that the agents are nonexempt because they work away from their offices less than 50 percent of the time. The court also awarded substantial damages for overtime violations, pay stub violations, and interest.

The department’s statement said the Kern County trial revealed systemic pay violations by ZipRealty. “We learned in the course of the Bakersfield case that ZipRealty real estate agents frequently received no pay at all,” Su said. 10-06-2011. Bureau of National Affairs.

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