Labor & Employment Law Daily Wrap Up, WAGE-HOUR—Wash. Sup. Ct.: No formal order necessary before DLI may pursue action to collect unpaid wages on behalf of employees, (May 30, 2025)

By Ronald Miller, J.D.

The undisputed content of a proposed agreement, along with DLI’s contemporaneous e-mails satisfied the agency’s statutory duty to order the employer to pay wages owed to its employees as a prerequisite to filing suit to collect those wages.

A Washington statute, RCW 49.48.040(1)(b), unambiguously requires the Department of Labor and Industry (DLI) to order an employer to pay wages owed before the agency may file suit to collect those wages, ruled the Washington Supreme Court. However, the statute does not require the agency to do so with a formal order containing a sum certain that DLI might not yet be able to determine, due to lack of access to sufficient employer records. It’s clear that the legislature knows how to create detailed, formal administrative processes for ordering employers to pay wages owed—and that it chose not to do so here. Thus, the DLI may file suit when necessary to collect unpaid wages, with the specific amount owed, along with other potential damages, to be determined through discovery and further litigation. Justice Gonzalez filed a separate opinion concurring in the result (Department of Labor and Industry v. Cannabis Green, LLC dba Lovely Buds , No. 102922-5 (Wash. Sup. Ct. May 29, 2025)).

The employer operates three cannabis retail stores in Spokane. The three stores employ between 75 and 100 people. Employees were required to work shifts at all of the stores.

Wage complaint. In January 2019, a former employee filed a wage complaint under the wage payment act (WPA), chapter 49.48 RCW, against the employer, alleging overtime violations. The employee alleged that the employer failed to pay her overtime for the total hours she worked across all three stores.

DLI investigation. The DLI investigated and concluded that the employer had a joint-employer relationship with respect to its employees at all three stores, so state laws required it to pay overtime when an employee’s total hours exceeded 40 hours in a week across all the stores. In May 2019, DLI issued a citation and notice of assessment against the employer for failing to pay the employee overtime. In October 2019, the employer settled the wage complaint as to that employee. The settlement did not affect any other worker.

DLI’s investigation of the employee’s wage complaint revealed that the employer had also violated overtime laws as to other employees. In March 2020, DLI requested certain records from the employer, to which it complied. In October and November 2020, DLI requested additional payroll records and work schedules, as well as information about other employer policies. The employer did not comply with either request. Instead, it objected to the investigation and refused to provide any additional information.

Compliance agreement. In August 2021, DLI sent a proposed compliance agreement to the employer to resolve wage and hour issues, sick leave issues and other matters. The agreement identified the employer’s violations of the Minimum Wage Act’s provisions on “overtime pay, unpaid hours worked, sick leave, lunches and break time.” That proposed agreement would have required the employer to conduct self-audits on compliance and report them to DLI for a year. It would have also required the employer to pay DLI $25,000 “in attorney fees and costs.” The employer rejected the proposal.

In May 2022, DLI filed a complaint against the employer on behalf of affected workers who worked for the employer since March 2019. It filed the complaint pursuant to RCW 49.48.040 and identified many of the same wage and hour violations found in the proposed compliance agreement. DLI later amended the complaint to allege that the employer owed employees approximately $318,500 in unpaid wages.

Matter of first impression. In November 2022, the employer filed a motion to dismiss. The trial court granted the motion. The Court of Appeals affirmed. It held, as a matter of first impression, that under RCW 49.48.040(1)(b), DLI “cannot institute actions to collect sums that it had not previously determined to be owed and ordered from the employer.” Thus, the appeals court concluded that “since DLI failed to comply with this statutory prerequisite it is not authorized to institute an action in superior court.”

No formal order required. No court has yet answered the question posed here: whether RCW 49.48.040(1)(b) requires DLI to issue a formal order to the employer to pay a sum certain as a prerequisite to filing suit to collect unpaid wages. Here, the Washington Supreme Court held that the statute requires DLI to demand payment before filing suit, but that it does not require the agency to do so with a formal order containing a sum certain that DLI might not yet be able to determine, due to lack of access to sufficient employer records.

As the Court of Appeals explained, RCW 49.48.040(1)(b) grants DLI two powers: it may order payment and it may institute actions. The statute is permissive—DLI need not exercise either power. The high court agreed with the appeals court that the structure of the sentence shows that “the second power supplements the first.” DLI may order the payment of wages owed. If the employer complies, there may be no need to exercise the second power. But if the employer’s actions make it “necessary” to institute an action to recover those wages, DLI is then empowered to do so.

But nothing in the text of subsection (1)(b) suggests that DLI must order payment of a specific amount of wages before it is in a position to determine exactly what that number is. Instead, the text says broadly that DLI may order payment of “all wages owed the workers.” Reading “all wages owed the workers” as necessarily referring to a sum certain is also inconsistent with subsection (1)(b)’s provision that DLI may institute an “action.”

Finally, the state high court disagreed with the appeals court that the participial adjective “determined” in the phrase “sums determined owed” necessarily refers to a precise sum that has already been determined prior to initiation of an action. It is more reasonable to read “sums determined owed” as referring to sums that will be determined to be owed as part of the discovery and litigation process.

Thus, the high court concluded that while DLI must order an employer to pay wages owed prior to filing suit to recover those wages, it need not order payment of a sum certain.

Notice of assessment. Throughout this litigation, the employer argued that RCW 49.48.040(1) requires DLI to issue a formal administrative citation and notice of assessment prior to filing suit. However, the state high court rejected that argument. When examining the statute’s “order” requirement in the context of other related statutes, it is clear that the legislature knows how to create detailed, formal administrative processes for ordering employers to pay wages owed—and that it chose not to do so here, observed the court.

Violations identified. Moreover, the face of DLI’s proposed compliance agreement showed that the agency identified the employer’s wage law violations prior to filing suit. It also showed that DLI identified the time periods during which each of those alleged violations occurred before filing suit. And it showed that DLI sought a remedy for those violations.

The only remaining question was whether DLI’s decision to send the employer a proposed compliance agreement and contemporaneous correspondence identifying specific wage and hour violations, identifying some laws violated, and notifying the employer that it would seek payment of wages owed (in an undetermined sum) if the employer declined to settle, satisfied DLI’s statutory prerequisites to filing suit. Here, the state high court concluded that the answer is “yes.” DLI’s steps satisfied its statutory duty to order the payment of wages due to workers first, as a prerequisite to filing suit.

Accordingly, the high court reversed the appeals court’s order of summary judgment and remanded the matter to the trial court.

Concurrence. In a separate opinion concurring in the result, Justice Gonzalez agreed with the majority that the legislature did not limit the power of the DLI by requiring the agency to first order the employer to pay “sums determined owed” as a prerequisite to filing suit. However, Justice Gonzalez would not find that RCW 49.48.040(1) requires the agency to demand that the employer pay unpaid wages as a prerequisite for suit. He did not find that requirement in the statute, and that implying such a requirement conflicts with the court’s obligation to read statutes enacted to remedy wrongs liberally in light of their purpose.

The case is No. 102922-5.

Judge: McCloud, G.

Attorneys: Anastasia R. Sandstrom, Office of the Attorney General, for Department of Labor and Industries. Samuel Charles Thilo (Evans, Craven, & Lackie) for Cannabis Green, LLC dba Lovely Buds.

Companies: Cannabis Green, LLC; Lovely Buds

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