The car wash industry is literally and figuratively a dirty business. In many cases, car wash operators make carwasheros wash hundreds of cars a day for a flat daily rate or even just tips. These daily wages and tips often don’t even equal the hourly minimum wage. Even dirtier, many car wash operators try to get away with wage and hour violations by simply closing down and re-opening under a different name. If you know a jabonero, tell him not to work himself into a lather over this. The Car Wash Worker Law (CWWL) makes any “successor” liable for any wages and penalties that its predecessor owes to a former employee.
Who’s an “Employer” Under the Car Wash Worker Law?
The CWWL broadly defines an “employer” as any individual, partnership, joint venture, corporation, limited liability company, or “association” engaged in the business of “car washing and polishing.” But car washing and polishing involve more than just soaping, drying, and polishing a car; they also involve detailing, servicing, or otherwise providing “cosmetic care” to vehicles.1 The definition of an “employer,” then, describes just about anyone who owns or operates just about any type of car wash, whether a hand, in-bay automatic, tunnel, chemical, steam, or mobile car wash.
The CWWL excludes several categories of individuals and entities from the definition of an “employer.” The CWWL doesn’t apply to: (1) a charitable, youth, service, veteran, or sports group, club, or association that intermittently washes and polishes cars to raise funds for charitable, educational, or religious purposes; (2) a licensed vehicle dealer, car rental agency, new motor vehicle dealer, or automotive repair dealer that washes and polishes cars as a service ancillary to its primary business; or (3) any self-service car wash or automated car wash that has employees for cashiering or maintenance purposes only.2
When Is a “Successor” Liable for Its Predecessor’s Unpaid Wages?
The question of who is a “successor” under the CWWL is controversial. Normally, a successor is an individual or entity to whom another individual or entity sells, assigns, or otherwise transfers its business. But that doesn’t mean a successor is automatically liable for its predecessor’s wrongdoing. For a successor to be liable, it must: (1) agree to assume its predecessor’s liabilities; (2) merge or consolidate with its predecessor; (3) constitute a mere continuation of its predecessor; or (4) receive its predecessor’s assets for the purpose of enabling the predecessor to defraud its creditors.3
The CWWL, however, makes a successor liable for its predecessor’s unpaid wages and penalties if the successor: (1) uses substantially the same facilities or workforce to offer substantially the same services as the predecessor; (2) shares in the ownership, management, or control of the predecessor’s labor or business operations; (3) employs as a manager anyone who controlled the wages, hours, or working conditions of the predecessor’s employees; or (4) “is an immediate family member of any owner, partner, officer, or director of the predecessor employer of any person that had a financial interest in the predecessor employer.”4
The CWWL can lead to bizarre results. For example, an immediate family member of an owner, partner, officer, or director of a car wash might be liable for whatever wages and penalties the predecessor owed – even if the immediate family member is not and has never been in the business of car washing and polishing. The reason for this anomalous result is that the CWWL rejects the traditional concept of successor liability and provides that any “immediate family member” of a predecessor employer is a “successor.”5 So if an employer shuts down to avoid paying wages, carwasheros might be able to go after his brother.
If a car wash operator fails to pay wages, interest on wages, fringe benefits, or tips, a carwashero may proceed in one of two ways. First, he may proceed directly against the car wash operator or its surety bond.6 Second, he may submit a claim in writing to the Labor Commissioner for a disbursement from the Car Wash Worker Restitution Fund if the car wash operator refuses to pay up or lacks a surety bond sufficient to cover the amount of the unpaid wages, benefits, and/or tips. Now that will clean up a car wash operator’s act.