What Happened in the Newport Beach Carwash Case?

The Labor Commissioner’s Bureau of Field Enforcement (BOFE) investigated Newport Auto Spa, Inc. (dba The Car Spa) and found systemic violations affecting 23 workers, some employed for up to 20 years. Key issues included:

- Unpaid overtime and hours worked

- Off-the-clock work (e.g., requiring employees to stay on-site without pay during slow periods)

- Denied or interrupted meal and rest breaks

- Inaccurate payroll records

The settlement holds the company, its owner, and a related entity liable, with individual workers receiving payments ranging from $8,500 to $92,800.

Why This Matters More Than Ever in 2026

This settlement comes amid heightened enforcement by the Labor Commissioner, with the Bureau of Field Enforcement (BOFE) issuing thousands of citations that have significantly impacted tens of thousands of workers across the state in recent years. The increased scrutiny and enforcement actions are indicative of a broader commitment to uphold labor laws and protect workers' rights, which have become a priority for regulatory bodies. As a result, businesses must be acutely aware of their obligations to avoid the pitfalls that can lead to costly penalties and reputational damage.

Starting January 1, 2026

California’s statewide minimum wage is set to rise to $16.90 per hour, an increase from the previous rate of $16.50. In addition to this, the minimum annual salary for exempt employees will see a significant increase to $70,304. This adjustment reflects the state's ongoing efforts to ensure that wages keep pace with the cost of living and inflation, providing workers with a more livable income. Furthermore, many cities and counties within California have established even higher local minimum wage rates, which can create additional complexities for employers operating in multiple jurisdictions.

Examples of 2026 Local Minimum Wages (Higher Than $16.90)

• West Hollywood: $20.25

• Emeryville: $19.90

• Mountain View: $19.70

• Sunnyvale: $19.50

• Berkeley: $19.18

• San Francisco: $19.18

• Belmont: $18.95

• Cupertino: $18.70

Common violations, such as those highlighted in this carwash case — including off-the-clock work, missed breaks, and overtime miscalculations — become even more financially burdensome with the implementation of these higher base rates and automatic penalties for non-compliance. Employers must recognize that as wage rates increase, the stakes for compliance also rise dramatically, making it essential to address potential violations proactively.

How to Protect Your Business Now

Don’t become the next headline that draws negative attention to your business. Taking proactive steps can significantly reduce the risk of investigations and lawsuits that stem from wage and hour violations:

1. Conduct a comprehensive wage & hour compliance audit. Thoroughly review employee classifications, time records, break policies, and overtime calculations to ensure they align with current laws and regulations. This audit should be a regular practice, not just a one-time event, to keep pace with ongoing changes in the law.

2. Update your employee handbook and pay practices to reflect the changes effective in 2026. This includes revising policies related to wages, overtime, and employee rights to ensure that all staff are informed and compliant with the latest regulations.

3. Train managers and supervisors on proper timekeeping and break enforcement. Ensure that they understand the importance of compliance and are equipped with the tools and knowledge to enforce policies consistently and fairly.

4. Consider establishing a fractional general counsel retainer for ongoing legal guidance. Having access to legal expertise can help navigate complex labor laws and provide timely advice on compliance issues as they arise.

At the Law Offices of Eric A. Boyajian, we specialize in assisting California employers in maintaining compliance and avoiding costly mistakes through flat-fee audits, tailored policies, and preventive legal advice.

Our goal is to empower businesses to operate within the law while fostering a fair work environment for all employees.

Are you ready to audit your pay practices for 2026 and beyond? Contact us today for a confidential review to ensure that your business is on the right track and prepared for the changes ahead.

California, wage theft isn’t just unfair — it’s expensive. Let us help you get it right.