Friday, March 5, 2010


Nobody speaks of how Pharaoh is wallowing in gold, yet feels slighted if he can't get something for nothing from his poorest slave. His gold is better spent on enlightened financial speculation in markets (regal gambling) - in order to support the lifestyles of his wealthy sycophants. Perhaps acquisition of new and flashy (or old and distressed) mercantile concerns he knows not how to run. Never to be paid to unseen workers who will only clamor for more. He still expects his slaves to gather their own straw to make their bricks with no complaints, and kiss his feet in gratitude, feeling lucky that they have jobs.

Welcome to the Kingdom of Wall Street-run Title Insurance Companies!

Per State of California Insurance Code Section 12360:

“An insurer which anywhere in the United States transacts any class of insurance other than title insurance is not eligible for the issuance of a certificate of authority to transact title insurance in this State nor for the renewal thereof.”

When the Insurance Code was drafted, nobody imagined that multi-lines insurers would so easily circumvent this fundamental law governing the business of title insurance in California. Through the miracle of corporate Venn diagrams and legal non-imputation, huge multi-national Wall Street insurance holding companies such as The First American Corporation (“TFAC”), have created wholly-owned subsidiaries to do their title insurance and escrow bidding here in California.

One egregious result of Wall Street-directed management of California title and escrow companies has been the manipulation of profit and loss statements by omission of countless hours of unpaid wages (regular and overtime) – plus taxes and penalties – put in by its employees.

Consider: which form of economic system is based on the free labor of its workers?

In Orange County Case No. 06CC00197 GRUENDER VS FIRST AMERICAN TITLE COMPANY filed September 26, 2006, the dysfunctional state of affairs here in California is briefly revealed. The case represents the tip of the iceberg of wage and hour violations by First American Title Company (FATCo), a wholly-owned and controlled subsidiary of TFAC.

While admitting no wrongdoing, FATCo apparently shelled out $11M to be divvied up between attorneys (who received 25%) and a class of 315 its title officers. Plaintiffs contended that employees were not paid for OT hours worked beyond 8/day 40/week (plus missed breaks and lunches), etc.

FATCo employees not included as members of the class receive nothing under the settlement. Those unpaid wages and taxes are already in the pockets of TFAC.

California workers have a constitutional right to be paid which can only be waived by written agreement. Under California labor law, the vast majority of title and escrow officers cannot be classified as “exempt” employees. An employer cannot legally refuse to pay them for overtime hours worked based upon such an erroneous job classification. Yet the practice is ubiquitous.

Unfortunately, since the advent of Wall Street ownership and management of California title and escrow companies, it has been commonplace for employees to work off the clock and unpaid. Why?

Understaffed operations + impossible deadlines + plus management “no OT” directives + free labor by responsible employees to close transactions = huge liability for unpaid wages and taxes.

Employees cannot legally donate their time to a for-profit corporation in California, but you can bet these companies pay no taxes on the “donated” labor!

According to the California Department of Industrial Relations (“DIR”), in order to collect unpaid wages (four year lookback) once he/she becomes aware of the fact the affected party simply needs to file a claim with the DIR. No lawsuit is needed. The DIR will investigate, and the employee will eventually get his/her back pay.

Yet, California’s title or escrow company employees almost never do so. Why? The reasons I’ve heard are numerous, but boil down to five categories:

  1. Fear of retribution and/or blackballing within the industry
  2. Ignorance of rights under the law
  3. Misplaced loyalty
  4. Unwillingness to be compensated while their coworkers are not
  5. Employer prevarication: “you’re not entitled to OT in your position” - or - “you’ll have to donate one day labor per month or we’ll all lose our jobs”

Regarding #4: under its present operational procedures, the DIR will not investigate reports of widespread workplace Labor Code violations, unless all the affected employees notify them. So, even if one person is brave enough to speak up about labor abuse in the workplace, the State of California will do nothing to enforce its own laws. Just like with Wal-Mart and the other Big Box stores.

Employees have been left with the cumbersome class-action litigation process to collect a portion of an agreed settlement fund or wait for jury to rule in their favor down the road. Those who are not lucky enough to be certified as members of the class can expect no justice. Nor a penny. Their employer will hopefully emend its labor practices to pay employees what they are owed on a “go-forward” basis to avoid future litigation, but “having admitted no wrongdoing” there is no impetus to do so. And forget any back wages.

With the acquisition of most title and escrow companies (and various affiliated service companies) in California by a few Wall Street holding companies, the pool of unpaid wages of these cheated employees is never retained in the front-line California corporations that bring home the bacon. The money instantly finds its way into the hands of its Wall Street parent. Whence it passes from there is veiled in corporate mystery.

That means that if enough employees dun their company for back wages, they can bankrupt their employer while the money is safe in the coffers of the parent! Call it Two-Card Monty. Employees and taxing authorities always lose.

"Right to Work" laws and “At-Will” employment (including all the "protections" of our correspondingly rewritten Labor Code) was sold to Californians as a safe alternative to a union contract – with none of the corruption and politics of unions. Due to non-enforcement, California labor law has almost no teeth at present. Add in Wall Street greed to the mix, and you have a perfect storm of wholesale abuse which continues unchecked across all industries here.

Follow the money.


Regardless of what type of business you are employed by, be aware of your Constitutional right to wages in California – and all the implications that follow. An “exempt” classification applies here in far fewer instances than most people realize and differs from the broader Federal exemptions which Wall Streeters try and hide behind. “We didn’t know the law in California was different” said the Corporate Compliance Officer back East. Right.

If you are working under conditions that force you to work off the clock, and/or if you experience other workplace labor code violations – you need to contact and then file a claim with the DIR.

If you are not in California, check with your State labor board and with the U.S. Department of Labor.

DON’T BOTHER with your company’s internal reporting mechanisms. They are often designed to isolate and eliminate anyone who illuminates illegal practices, not to rectify them. Make the government agencies do their jobs!


Even though there are already laws on the books to remedy these abuses, frequently the intervention of an elected official is necessary to get a government agency to do its job. Or open public hearings to determine why the law is not being enforced. The greater the public outcry, the greater the likelihood of action to correct these violations.

Working Off the Clock = Part-Time Slavery.


Just as the DIR has been ignoring rampant wage and hour violations in white-collar businesses of this type, the offshoring of title insurance functions (contrary to California Insurance Code Section 12389 et seq.) has been unopposed by present and former Insurance Commissioners in California. Perhaps because Wall Street pockets run deep at campaign contribution time? Californians – employees and consumers alike – have suffered the negative and damaging consequences of offshoring of various industries, and this is no different.

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