Southern California carwash mogul accused of wage theft and destroying evidence

LOS ANGELES — According to The Orange County Register, Vahid David Delrahim, who owns some 100 local carwashes and gas stations, has been accused by the U.S. Department of Labor of wage theft in failing to pay minimum wage and overtime to around 700 workers at a dozen of his facilities in Orange, Los Angeles, San Bernardino and Ventura counties over a five-year period.

The case has also raised ethical issues concerning Delrahim’s lawyers at Littler Mendelson, the country’s largest management-side employment firm, the article continued.

According to the prosecutors, the article noted, the workers, the vast majority of whom are Latino, were ordered to arrive early but not clock in until customers arrived and clock out when business slowed but remain on duty until more customers showed up.

As a result, the government is seeking at least $4 million in back wages and damages, the article added.

In court documents, Delrahim’s lead attorney, Los Angeles-based Rebecca Aragon, and her team called the government’s claims “frivolous, vexatious and unreasonable,” arguing that Delrahim was “without sufficient knowledge…to admit or deny” the allegations.

Furthermore, Littler Mendelson lawyers said in court documents that the workers “were engaged in activities that were preliminary or postliminary to their principal activities and thus are not compensable,” the article noted.

The Delrahim investigation began in June 2015 with 63 current and former workers at a single facility, the Brea Car Wash & Detail Center, the article stated, and has since evolved into a major legal battle, where three of his Agoura Hills-based companies are also defendants: Southwest Fuel Management, Goldenwest Solutions Group and California Payroll Group.

In addition, legal ethics issues have arisen, the article stated; for instance, shortly after the investigation began, Delrahim and Littler Mendelson were told to preserve potential evidence, but court records show that text messages, email accounts and videos of the workers’ comings and going were destroyed.

Prosecutors labeled this “wanton destruction” of evidence, while Delrahim and Littler Mendelson said that texts, email accounts and videos were routinely, but not deliberately, deleted and would not have proven the accusations of wage theft, the article continued.

Over the course of the two-year case, the court has sanctioned Delrahim and Littler Mendelson five times for withholding documents and other “not substantially justified” delaying tactics, ordering them to reimburse the government $23,850 in legal fees, the article noted.

Moreover, last month, Judge Fernando Olguin tossed out 37 declarations from carwash workers citing the “coercive” and “improper” manner in which they had been collected, the article stated; in an 11-page order that he wrote, the judge said that Delrahim and his companies’ “misleading conduct has created fear and confusion among its employees,” making it less likely for them to cooperation with the investigation.

One employee began to cry during an interview with Delrahim’s lawyer, and another said he signed “because he felt he would lose his job or have his hours cut if he did not,” the article added.

Olguin ordered that all 700 workers receive a notice in English and Spanish informing them that the government has determined that they are owed back wages, that they can refuse to speak with Delrahim’s lawyers without fear of retaliation and that talking to them could limit their ability to collect back wages, the article stated.

The dozen carwashes cited by the Labor Department include: