Case Name: DONALD C. CRAIB, as Deputy Labor Commissioner, etc., Plaintiff and Respondent, v. JAY S. BULMASH, as Trustee, etc., Defendant and Appellant
Court: Supreme Court of California
Jurisdiction: California
Decision Date: 1989-08-28
Citations: 49 Cal. 3d 475
Docket Number: No. S004682
Parties: DONALD C. CRAIB, as Deputy Labor Commissioner, etc., Plaintiff and Respondent, v. JAY S. BULMASH, as Trustee, etc., Defendant and Appellant.
Judges: 
Reporter: California Reports
Volume: 49
Pages: 475–501

Head Matter:
[No. S004682.
Aug. 28, 1989.]
DONALD C. CRAIB, as Deputy Labor Commissioner, etc., Plaintiff and Respondent, v. JAY S. BULMASH, as Trustee, etc., Defendant and Appellant.
Counsel
Jay S. Bulmash, in pro. per., and Hugh J. Haferkamp for Defendant and Appellant.
H. Thomas Cadell, Jr., and Marjorie J. Weinzweig for Plaintiif and Respondent.

Opinion:
Opinion
EAGLESON, J.
This case concerns the circumstances under which an employer may assert the Fourth and Fifth Amendments to the United States Constitution as defenses to judicial enforcement of an administrative agency's subpena duces tecum for records of a kind which all employers are required by law to maintain.
We first reject the employer's claim that a court order compelling compliance with the agency's subpena is an "unreasonable search and seizure" under the Fourth Amendment unless supported by "probable cause." Forty years of United States Supreme Court decisions establish that the subpenaed records need only be relevant to an authorized regulatory purpose and described with reasonable specificity. While this approach traditionally has been applied in the context of subpenaed corporate records, we see no reasoned basis for departing from precedent solely because the instant employer is an individual, rather than a corporation. Further, there is no reasonable expectation of privacy against judicially compelled disclosure of records required to be kept, and subject to administrative subpena, under a lawful regulatory scheme.
Also, consistent with the traditional exemption of "required records" from the Fifth Amendment privilege against compulsory self-incrimination, an employer must unconditionally respond to a court order enforcing an agency's subpena for wage and hour records which the employer is statutorily required to maintain. The privilege does not apply where, as here, the reporting requirement is intended to promote a legitimate regulatory aim, is not directed at activities or persons that are inherently "criminal," and only requires minimal disclosure of information of a kind customarily kept in the ordinary course of business.
The Court of Appeal therefore erred in relying on the Fourth and Fifth Amendments to reverse a court order compelling the employer to comply with the instant administrative subpena. We will reverse the judgment of the Court of Appeal.
Background
The Division of Labor Standards Enforcement (Division) is charged with enforcing Labor Code provisions (§ 1171 et seq.) and Industrial Welfare Commission (Commission) orders governing wage, hour, and working conditions of California employees. (§61.) The Division has broad investigatory powers (§ 1193.5) and duties (§§ 1195, 1195.5), including the power to issue subpenas compelling the attendance of witnesses and production of records. (§§ 7, 74.) The statutory scheme requires "[e]very person employ ing labor in this state" to maintain certain employee identification and payroll records. (§ 1174, subds. (c), (d).) An employer who fails or refuses to maintain and furnish these records is guilty of a misdemeanor. (§ 1175, subds. (a), (d).) The Division also has a variety of means by which to enforce the substantive wage and hour provisions, including civil actions to recover unpaid wages (§§ 1193.6, 1194), actions for injunctive relief (§ 1194.5), "civil" monetary penalties (§ 1197.1), and misdemeanor sanctions (§ 1199).
Here, Jay S. Bulmash (Bulmash) was appointed trustee for his sister, Serena Gluck (Gluck), and employed attendants to care for her. In February 1986, Deputy Labor Commissioner Donald C. Craib (Commissioner) issued and served a subpena duces tecum directing Bulmash to appear at the Division's Santa Barbara offices one month later and to produce time and wage records, and names and addresses, for all persons employed by the trust over the previous three-year period. In an attached declaration, the Commissioner stated that the documents were needed to "verify wages and compute unpaid overtime pay for private household employees covered under Industrial Welfare Commission Order 15-80 and employed by Jay S. Bulmash as trustee for Ser[e]na B. Gluck." Order 15-80 requires that such records be maintained for a minimum of three years.
After Bulmash failed to appear as requested, the Commissioner filed an unverified petition in the superior court seeking to enforce the subpena. The petition alleged that the subpena and investigation were authorized under the statutory provisions cited above. According to the petition, the investigation began after a "former employee" of the trust lodged a complaint against Bulmash for "failure to pay overtime wages as required by Industrial Welfare Commission Order 15-80." In points and authorities supporting the petition, the Commissioner argued there was "probable cause" to suspect that Bulmash was "in violation of certain sections of the Labor Code [concerning] payment of wages for hours worked." The petition itself further averred that the subpenaed records were necessary to determine whether the alleged violation had occurred. No affidavits by the complaining trust employee or by Division staff members supported the foregoing statements.
In written opposition to the petition, Bulmash argued that the subpena was "overbroad," that compliance would be "burdensome," and that the records were not "relevant" to any matter pending before the Division. Bulmash also insisted that because the subpena was issued without "probable cause," court-ordered compliance would amount to an "unlawful search and seizure." After a brief hearing, the court ordered Bulmash to appear before the Commissioner and produce the subpenaed records.
On appeal, Bulmash reiterated his claim that the Fourth Amendment precluded enforcement of the subpena because no sworn factual statement establishing probable cause accompanied the Commissioner's petition. The Court of Appeal agreed and reversed the order. The court reasoned that, because "criminal" sanctions could be imposed for certain wage and hour violations, the subpena was a "search" for criminal "evidence" which must meet the standards applicable to search warrants. At the urging of both parties, the court also addressed the question whether enforcement of the subpena would violate Bulmash's Fifth Amendment privilege against compulsory self-incrimination. The court answered this question in the affirmative, apparently concluding that both the contents of the records and the compulsory act of production amounted to incriminating testimony of Bulmash's failure to pay the appropriate wage.
Discussion
A. Fourth Amendment
The Commissioner essentially concedes that the instant subpena fails to comply with literal Fourth Amendment requirements for a criminal warrant issued only "upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized." He insists, however, that judicial enforcement of the subpena is constitutionally permissible under a standard which is less exacting than that required for a search in a criminal prosecution. Based on a recent line of cases by the United States Supreme Court, we agree.
As Bulmash suggests, it was once assumed that the compulsory production of records was a "search and seizure" in the literal Fourth Amendment sense (see, e.g., Boyd v. United States (1886) 116 U.S. 616, 622 [29 L.Ed. 746, 761, 6 S.Ct. 524]), and that subpenas, like warrants, were enforceable only if issued pursuant to a formal "complaint" or at least upon probable cause to suspect "a specific breach of the law." (Harriman v. Interstate Commerce Com. (1908) 211 U.S. 407, 419-420 [53 L.Ed. 253, 263, 29 S.Ct. 115]; see also, Jones v. Securities Commission (1936) 298 U.S. 1, 25-28 [80 L.Ed. 1015, 1025-1027, 56 S.Ct. 654]; Fed. Trade Comm. v. Amer. Tobacco Co. (1924) 264 U.S. 298, 305-306 [68 L.Ed. 696, 700, 44 S.Ct. 336, 32 A.L.R. 786].)
However, it is now clear that such a restrictive view of the administrative process is not constitutionally compelled. As regulatory schemes have become increasingly important in enforcing laws designed to protect the public's health and welfare, reliance on "probable cause" as a means of restraining agency subpena power has all but disappeared. (See United States v. Morton Salt Co. (1950) 338 U.S. 632, 641-643 [94 L.Ed. 401, 410-411, 70 S.Ct. 357]; see also 1 Davis, Administrative Law Treatise (2d ed. 1978) Investigation, § 4.2, pp. 228-232.)
The Commissioner correctly argues that the leading case is Okla. Press Pub. Co. v. Walling (1946) 327 U.S. 186 [90 L.Ed. 614, 66 S.Ct. 494, 166 A.L.R. 531] (hereafter Oklahoma Press). There, the United States Supreme Court rejected a Fourth Amendment challenge to judicial orders enforcing administrative subpenas for payroll and sales records. The subpenas were issued by the federal wage and hour administrator to determine whether certain publishing corporations were covered under, and had violated, the Fair Labor Standards Act of 1938 (FLSA). At the outset, the court observed that "no question of actual search and seizure" is raised where the agency has not sought "to enter [the subpenaed parties'] premises against their will, to search them, or to seize or examine their books, records or papers without their assent, otherwise than pursuant to orders of court authorized by law and made after adequate opportunity to present objections . . . ." (327 U.S. at p. 195 [90 L.Ed. at p. 622].) The court further questioned whether the Fourth Amendment applied at all to the subpenas at bar, noting that corporate records historically had been subject to the government's "broad visitorial power." (Id. at pp. 204, 208 [90 L.Ed. at pp. 627, 629].)
Accordingly, Oklahoma Press articulated a test which applied Fourth Amendment requirements only by analogy. The notion that a subpena could be enforced only where a specific charge or complaint is pending was explicitly rejected. Instead, said the court, the investigation need only be for "a lawfully authorized purpose, within the power of [the legislative body] to command." (327 U.S. at p. 209 [90 L.Ed. at p. 630], italics added.) In addition, the requirement of " 'probable cause, supported by oath or affirmation,' literally applicable in the case of a warrant," is satisfied as long as the subpenaed documents are "relevant" to the inquiry. {Ibid., italics added.) "Beyond this the requirement of reasonableness, including particularity in 'describing the place to be searched, and the persons or things to be seized,' also literally applicable to warrants, comes down to specification of the documents to be produced adequate, but not excessive, for the purposes of the relevant inquiry." (Ibid., italics added.) In a later case, the court emphasized that, while the subpena may be issued and served by the agency, the subpenaed party must have the opportunity for judicial review before suffering any penalties for refusing to comply. (See v. City of Seattle (1967) 387 U.S. 541, 544-545 [18 L.Ed.2d 943, 946-947, 87 S.Ct. 1737] [in dictum].)
This test has been routinely applied by the high court to reject various Fourth Amendment challenges to official demands for records. (See, e.g., California Bankers Assn. v. Shultz (1974) 416 U.S. 21, 66-67 [39 L.Ed.2d 812, 843-844, 94 S.Ct. 1494] [upholding reasonableness of Secretary of Treasury regulations requiring banks to report certain customer transactions]; United States v. Powell (1964) 379 U.S. 48, 57 [13 L.Ed.2d 112, 119, 85 S.Ct. 248] [holding Internal Revenue Service summons for records relating to company tax returns need not be supported by probable cause to suspect fraud]; McPhaul v. United States (1960) 364 U.S. 372, 382-383 [5 L.Ed.2d 136, 144, 81 S.Ct. 138] [finding no overbreadth in congressional committee subpena despite assertion that existence of records was never established]; United States v. Morton Salt Co., supra, 338 U.S. 632, 651-653 [94 L.Ed. 401, 415-416] [finding no unreasonableness in Federal Trade Commission order for corporate reports to prove compliance with prior decree].)
More recently, the court has applied these principles to facts substantially similar to those involved here. In Donovan v. Lone Steer, Inc. (1984) 464 U.S. 408, 410-411 [78 L.Ed.2d 567, 569-570, 104 S.Ct. 769], a Department of Labor official served a subpena in the lobby of a corporation, requesting that it appear at department offices on a later date and produce "certain payroll and sales records" which it was required by law to maintain. There was no dispute that the subpenaed records, which spanned a two-year period, were relevant to an investigation authorized under the FLSA. The employer's sole claim was that enforcement would violate the Fourth Amendment because no prior judicial warrant had been obtained. The court disagreed, stating that "entry into [a] public lobby . for the purpose of serving an administrative subpena is scarcely the sort of governmental act which is forbidden by the Fourth Amendment." (Id. at p. 413 [78 L.Ed.2d at p. 572].) Because the agency had not attempted to enter nonpublic areas on the premises, the only "defenses available to [the] employer" were those set forth in Oklahoma Press, supra, 327 U.S. 186, "allowing him to question the reasonableness of the subpoena, before suffering any penalties for refusing to comply with it, by raising objections in an action in district court." (Donovan, supra, 464 U.S. at p. 415 [78 L.Ed.2d at p. 573].)
As we have done in prior cases, we apply the same test of "reasonableness" here. (See Younger v. Jensen (1980) 26 Cal.3d 397, 404-405 [161 Cal.Rptr. 905, 605 P.2d 813]; Brovelli v. Superior Court (1961) 56 Cal.2d 524, 529 [15 Cal.Rptr. 630, 364 P.2d 462].) The instant record reveals no official action beyond issuance and service of the subpena. The subpena itself does not authorize actual entry or immediate inspection, but merely requests future production of specific records at the Commissioner's office in another city. Thus, under Donovan v. Lone Steer, Inc., supra, 464 U.S. 408, Bulmash cannot insist upon a showing of probable cause.
To the extent Bulmash properly challenges the breadth and relevance of the subpena, these claims are not well taken. There is no dispute, of course, that the Commissioner is entitled to investigate the type of alleged wage-order violations at issue here (§§ 61, 1193.5), and that such investigations are within the power of the Legislature to command. (See Industrial Welfare Com. v. Superior Court (1980) 27 Cal.3d 690, 700-702 [166 Cal.Rptr. 331, 613 P.2d 579].) The instant subpena described the targeted records with particularity, and sought only those records which the Commissioner could minimally expect would be available in light of pertinent record keeping requirements. (§ 1174; Cal. Code Regs., tit. 8, § 11150, subd. 7.) Bulmash does not suggest, nor do we find, that these requirements facially impose an unreasonable burden on employers subject to their terms. (See 29 U.S.C. § 211(c); 29 C.F.R. § 516.2(a), 516.5(a) (1988) [employers subject to the FLSA must maintain employee identification, wage, and hour records for three years].) Since they reflect a three-year wage and hour history for employees of the Gluck trust, the subpenaed records undoubtedly have some bearing on the overtime violation alleged here.
Bulmash nonetheless relies on cases upholding a form of "warrant" requirement for administrative inspections of residential and commercial property. (See, e.g., Marshall v. Barlow's, Inc. (1978) 436 U.S. 307, 311-315 [56 L.Ed.2d 305, 310-313, 98 S.Ct. 1816]; See v. City of Seattle, supra, 387 U.S. 541, 545-546 [18 L.Ed.2d 943, 947-948]; Camara v. Municipal Court (1967) 387 U.S. 523, 528-534 [18 L.Ed.2d 930, 935-938, 87 S.Ct. 1727].) Even in these cases, however, the "probable cause" necessary for an administrative warrant is less stringent than that required in criminal cases. (Cf. Rush v. Obledo (N.D.Cal. 1981) 517 F.Supp. 905, 916-917; Salwasser Manufacturing Co. v. Municipal Court (1979) 94 Cal.App.3d 223, 231-234 [156 Cal.Rptr. 292].) And, as explained in Donovan v. Lone Steer, Inc., supra, 464 U.S. 408, 414 [78 L.Ed.2d 567, 576], the Barlow's-See-Camara trio "turned upon the effort of the government inspectors to make nonconsensual entries into areas not open to the public. [Where] no such entry [i]s made[,] . . . the enforceability of [an] administrative subpoena duces tecum . is governed, not by our decision in Barlow's [supra, 436 U.S. 307] . . . but rather by our decision in Oklahoma Press Publishing Co. v. Walling [supra,] 327 U.S. 186 (1946)." Hence, Bulmash's reliance on inspection cases is misplaced.
Finally, Bulmash seeks to distinguish the cases cited by the Commissioner on grounds that they all involve corporate records. (See, e.g., Donovan v. Lone Steer, Inc., supra, 464 U.S. 408; United States v. Morton Salt Co., supra, 338 U.S. 632; Oklahoma Press, supra, 327 U.S. 186; Brovelli v. Superior Court, supra, 56 Cal.2d 524.) He suggests that the rules developed for administrative subpenas were based in part on the state's traditional "visitorial power" over corporations. Hence, he reasons, these cases do not alter the criminal probable cause standard where, as here, "private household records" of an "individual" are involved.
The Commissioner counters that it is not the identity of the subpenaed party, but the nature of the records themselves, which is dispositive. Under his view, there is a "diminished expectation of privacy" in records which are "required to be kept and subject to agency inspection."
No direct answer is provided by the pertinent authorities. Cases such as United States v. Morton Salt Co., supra, 338 U.S. 632, 652 [94 L.Ed. 401, 415-416], and Oklahoma Press, supra, 327 U.S. 186, 204-205 [90 L.Ed. 614, 627], indeed indicate that corporations historically have been entitled to less Fourth Amendment protection than individuals, but do not explain the extent to which this distinction influenced the Oklahoma Press test for subpenaed records. Also unexplained is the effect of Katz v. United States (1967) 389 U.S. 347, 351-353 [19 L.Ed.2d 576, 581-583, 88 S.Ct. 507], which shifted Fourth Amendment focus away from a consideration of protected "areas" to the reasonableness of a particular privacy expectation. The key post-Katz case of Donovan v. Lone Steer, Inc., supra, 464 U.S. 408, simply rearticulated the Oklahoma Press rule for corporate records subpenaed in the absence of a physical search.
We decline to limit Oklahoma Press, supra, 327 U.S. 186, in the manner urged by Bulmash. As listed in the subpena, the documents contain information presumably accumulated in the ordinary course of business, and uniformly requested of employers subject to this or analogous statutory schemes. It would be anomalous to prevent the Division from enforcing lawful wage and hour provisions through use of its authorized subpena power solely because the employer possessing such records is an "individual," rather than a corporation or large business. No comparable distinction is made for probable cause purposes where universal compliance with lawful building or housing codes is at stake. And, in the few cases involving subpenas directed at individuals under circumstances similar to this case, it was simply assumed that the Oklahoma Press test applied. (See I. C. C. v. Gould (3d Cir. 1980) 629 F.2d 847, 851, cert. den. 449 U.S. 1077 [66 L.Ed.2d 800, 101 S.Ct. 856] [sole proprietor]; Provenzano v. Porter (9th Cir. 1946) 159 F.2d 47, 48, cert. den. 331 U.S. 816 [91 L.Ed. 1834, 67 S.Ct. 1303] [sole proprietor].)
In any event, we agree with the Commissioner that no Fourth Amendment "privacy" claim can be asserted against an administrative subpena limited to the production of records which the subpenaed party is required to maintain, for the express purpose of agency inspection, under lawful statutes or regulations. In such cases, Fourth Amendment defenses to the subpena are those set forth in Oklahoma Press, supra, 327 U.S. 186.
Accordingly, we hold that the Fourth Amendment does not prohibit judicial enforcement of the instant administrative subpena. The Court of Appeal erred in reversing the order compelling compliance on this ground.
B. Fifth Amendment
Bulmash argues that, since the instant records could facially disclose noncompliance with wage and hour laws, the Fifth Amendment is a complete defense to court-ordered compliance with the subpena. He insists that all prerequisites for asserting the privilege are present, i.e., he is an individual who has been statutorily compelled to make incriminating statements which the Division could conceivably use as a basis for imposing civil and/or criminal penalties. Even though the Division does not yet have the records, and has not attempted to sanction Bulmash for substantive wage and hour violations, Bulmash alternatively insists that the Division must promise not to use the records in any possible, future criminal prosecution.
The Commissioner counters that the privilege simply does not apply where, as here, the subpenaed records are required to be kept pursuant to this kind of lawful regulatory scheme. He relies on a line of cases beginning with Shapiro v. United States (1948) 335 U.S. 1 [92 L.Ed. 1787, 68 S.Ct. 1375].
In Shapiro, regulations issued under the Emergency Price Control Act literally required the keeping and disclosure of sales records of a kind " 'customarily kept' " in the course of business. (335 U.S. at p. 5, fn. 3 [92 L.Ed. at p. 1792] [citations omitted].) A wholesaler complied with an administrative subpena for such records, but claimed, among other things, that the privilege applied. He was subsequently convicted under the act. The United States Supreme Court rejected his Fifth Amendment claim, stating that the privilege "cannot be maintained in relation to 'records required by law to be kept in order that there may be suitable information of transactions which are the appropriate subjects of governmental regulation and the enforcement of restrictions validly established.' " (Id. at p. 33 [92 L.Ed. at p. 1807], quoting dictum originally from Wilson v. United States (1911) 221 U.S. 361, 380 [55 L.Ed. 771, 779, 31 S.Ct. 538], italics added.) Shapiro also noted that the privilege traditionally has not been applied to public records, and that records kept under the act undoubtedly had " 'public aspects.'" (335 U.S. at p. 34 [92 L.Ed. at p. 1808], quoting Davis v. United States (1946) 328 U.S. 582, 602 [90 L.Ed. 1453, 1464, 66 S.Ct. 1256] (dis. opn. of Frankfurter, J.).)
The high court has since declined various opportunities to reexamine this "required records doctrine." (See, e.g., Spevack v. Klein (1967) 385 U.S. 511, 516-517 [17 L.Ed.2d 574, 578-579, 87 S.Ct. 625].) The court has upheld some Fifth Amendment challenges to mandatory reporting laws, but only after finding that Shapiro, supra, 335 U.S. 1, did not apply.
For example, in Marchetti v. United States (1968) 390 U.S. 39, 60-61 [19 L.Ed.2d 889, 905, 88 S.Ct. 697], the court held that the privilege was a complete defense to prosecution for noncompliance with federal tax and registration requirements on illegal gambling. In the court's view, the disclosure scheme created an impermissible and "substantial" risk of self-incrimination, because it required that lists of gambler-taxpayers be furnished to interested prosecutorial agencies. (Id. at pp. 53, 61 [19 L.Ed.2d at pp. 900-901, 905].) The court distinguished Shapiro, supra, 335 U.S. 1, primarily on grounds that "the [reporting] requirements at issue [there] were imposed in 'an essentially non-criminal and regulatory area of inquiry' while those here are directed to a 'selective group inherently suspect of criminal activities.'" (390 U.S. at p. 57 [19 L.Ed.2d at p. 903] [citation omitted].) Marchetti also observed that, unlike the price act in Shapiro, the wagering scheme did not involve records of a kind that were " 'customarily kept' " by the targeted group. (Ibid.) Finally, the court stated, "whatever 'public aspects' there were to the records at issue in Shapiro, there are none to the information demanded from Marchetti." (Ibid.) The court declined to impose a use restriction on the suspect information, noting that such a result would contravene Congress's clear intent.
The same analysis was used to reach similar results in two cases decided the same day as Marchetti. {Grosso v. United States (1968) 390 U.S. 62, 64-69 [19 L.Ed.2d 906, 88 S.Ct. 709] [federal registration and taxation of illegal gambling]; Haynes v. United States (1968) 390 U.S. 85, 95-100 [19 L.Ed.2d 906, 923, 88 S.Ct. 722] [federal registration and taxation of firearms typically used to commit crimes]; see also Leary v. United States (1969) 395 U.S. 6, 12-29 [23 L.Ed.2d 57, 68-78, 89 S.Ct. 1532] [federal registration and taxation of illegal marijuana transfers].)
More recently, in California v. Byers (1971) 402 U.S. 424 [29 L.Ed.2d 9, 91 S.Ct. 1535], a majority of the court refused to apply the privilege in a misdemeanor prosecution for noncompliance with a California Vehicle Code section requiring a driver involved in an accident to stop and identify himself. In a plurality opinion joined by three other justices, Chief Justice Burger perceived the task as one of "balancing the public need" for disclosure against "the individual claim to constitutional protections." {Id. at p.427 [29 L.Ed.2d at p. 17].) The plurality found no "substantial" risk of self-incrimination within the meaning of the Marchetti-Grosso-Haynes trio (cited ante, at pp. 487-488) for the following reasons: Although the Vehicle Code defined some criminal offenses, the hit-and-run law was intended to promote driver financial responsibility, not to facilitate criminal convictions. The group targeted by the law—all drivers in the state—was neither highly selective nor inherently suspect of criminal conduct. The regulated activities—driving a car and being in an accident—were not inherently unlawful. In short, the statute was "indispensable" to implementing an "essentially regulatory" goal. (Byers, supra, 402 U.S. at pp. 430-431 [29 L.Ed.2d at p. 19].)
In a concurring opinion, Justice Harlan expressed concern that the privilege might impair the state's dual interest in ensuring financial responsibility and deterring dangerous driving through criminal sanctions. He answered the key question—whether "some sort of immunity is required as a condition of compelled self-reporting"—in the negative. {Byers, supra, 402 U.S. at p. 454 [29 L.Ed.2d at p. 32].) Justice Harlan explained that the MarchettiGross-Haynes line of cases, which he authored, involved registration laws which focused almost exclusively on conduct which was criminal. "In con trast," he observed, "the 'hit and run' statute [in Byers] predicates the duty to report on the occurrence of an event which cannot, without simply distorting the normal connotations of language, be characterized as 'inherently suspect' . And, having initially specified the regulated event— i.e., an automobile accident involving property damage—in the broadest terms possible consistent with the regulatory scheme's concededly noncriminal purpose, the State has confined the portion of the scheme now before us . . . to the minimal level of disclosure . . . ." (402 U.S. at p.456 [29 L.Ed.2d at p. 34].)
The lower federal courts continue to apply the "required records doctrine" of Shapiro, supra, 335 U.S. 1, while distinguishing Marchetti, supra, 390 U.S. 39, and its progeny. (See, e.g., Grand Jury Subpoena Duces Tecum, Underhill (6th Cir. 1986) 781 F.2d 64, 67-69, cert. den. 479 U.S. 813 [93 L.Ed.2d 23, 107 S.Ct. 64]; In re Grand Jury Subpoena to Custodian of Records, etc. (6th Cir. 1974) 497 F.2d 218, 220-221, cert. den. 419 U.S. 1009 [42 L.Ed.2d 283, 95 S.Ct. 328]; United States v. Resnick (5th Cir. 1974) 488 F.2d 1165, 1168, cert. den. 416 U.S. 991 [40 L.Ed.2d 769, 94 S.Ct. 2400].) And, following the lead of Byers, supra, 402 U.S. 424, several cases have allowed the mandatory disclosure of information which, on its face, could implicate the reporter in criminal conduct. (See, e.g., United States v. Alkhafaji (6th Cir. 1985) 754 F.2d 641, 646-648 [duty under the Gun Control Act of 1968 to report delivery of firearms to common carrier even though transporting firearms may be unlawful]; United States v. Dichne (2d Cir. 1979) 612 F.2d 632, 638-641, cert. den. 445 U.S. 928 [63 L.Ed.2d 760, 100 S.Ct. 1314] [duty under the Bank Secrecy Act to disclose export of monetary instruments even though money may be stolen]; United States v. Stirling (2d Cir. 1978) 571 F.2d 708, 727-728, cert. den. 439 U.S. 824 [58 L.Ed.2d 116, 99 S.Ct. 93] [duty under the Securities Act of 1933 to disclose details of stock transactions which were unlawful].)
The same approach leads us to reject Bulmash's Fifth Amendment challenge to judicial enforcement of the Commissioner's subpena. As contemplated by Shapiro, supra, 335 U.S. 1, 33 [92 L.Ed. 1787, 1807], the information required by section 1174 is the "appropriate" subject of a lawful regulatory scheme. The reporting law is obviously intended to encourage voluntary compliance with minimum labor standards designed for the mutual benefit of employees and employers. Such standards are enforced, not with an aim to punish, but to "ensure employees are not required or permitted to work under substandard unlawful conditions, and to protect employers who comply with the law from those who attempt to gain competitive advantage at the expense of their workers . . . ." (§ 90.5, subd. (a).) Work conditions, and the integrity of the employment market, are concerns which cut to the core of the state's police power.
To this end, section 1174 defines the regulated act and class in the broadest possible terms. The statute applies to "[e]very person employing labor in this state" {ibid.), a group which cannot be viewed as highly selective or inherently suspected of criminal conduct. It is the employment of labor, not the violation of employment laws, which triggers the duty to report. This activity cannot be reasonably characterized as inherently suspect. We also note that this case does not involve the use of ostensibly regulatory reporting requirements to discover unrelated criminal conduct. (Cf. Garner v. United States (1976) 424 U.S. 648 [47 L.Ed.2d 370, 96 S.Ct. 1178].)
Consistent with this statutory theme of statewide, uniform regulation is the significant number of "civil" enforcement techniques available to ensure employees receive the minimum wage under proper working conditions. (See, e.g., § 1193.6, 1194, 1194.5, 1197.1.) These provisions, which seek to recover wages due and/or encourage continuing compliance with the law, would be rendered completely ineffectual were the state foreclosed from compelling the type of information sought here. Section 1174 requests the minimum amount of data necessary to implement the scheme's regulatory aim.
While the high court has placed less emphasis on other features of the "required records doctrine," the instant subpenaed records undoubtedly contain information of a kind "customarily kept" by employers and having "public aspects." (See Shapiro, supra, 335 U.S. at pp. 5, 34 [92 L.Ed. at pp. 1792, 1808].) This data occupies a basic role in any employer's accounting practices, and must be regularly summarized in payroll statements provided to employees. (§ 226, subd. (a).)
We therefore hold that the privilege does not apply to the instant subpena for records required to be maintained and produced under section 1174.
The judgment of the Court of Appeal is reversed.
Lucas, C. J., Panelli, J., and Kennard, J., concurred.
All further statutory references are to the Labor Code unless otherwise indicated.
Section 1193.5, subdivisions (a) and (b), authorize the Division to "[i]nvestigate and ascertain" the wages, hours, and working conditions of "all employees employed in any occu pation in the state," and to "[supervise the payment of unpaid minimum wages or unpaid overtime compensation owing to any employee . . . ."
Section 1195 requires the Division to "investigate" employee complaints and "take all proceedings necessary to enforce the payment of a wage not less than the minimum wage."
Section 1195.5 requires the Division, "upon request," to determine whether wages "which exceed the minimum wages fixed by the [C]ommission, have been correctly computed and paid."
Section 74 provides that, "for the purpose of enforcing [Commission] orders and provisions of this code," the Division chief "may issue subpoenas to compel the attendance of witnesses and production of books, papers, and records. Obedience to [such] subpoenas . . . shall be enforced by the courts." Section 7 allows Division deputies to exercise the subpena power.
Section 1174, subdivisions (c) and (d), require all employers in California to "[k]eep a record showing the names and addresses of all employees employed and the ages of all minors," and to keep "payroll records showing the hours worked daily by, and the wages paid to, employees . in accordance with rules established for this purpose by the [Commission."
Section 1175, subdivisions (a) and (d), provide that any person who "[n]eglects or refuses to furnish" this information, or "[f]ails to keep any of the records required by section 1174," is guilty of a misdemeanor.
The Commissioner indicated at oral argument that, as a practical matter, the Division rarely seeks criminal prosecutions of employers for failure to keep payroll records or comply with the minimum wage.
Bulmash was personally served with the subpena at a Seal Beach, California, address of unknown description. As our discussion will make clear, the fact that no other official action accompanied the act of service bears on Bulmash's Fourth Amendment claim.
This order sets forth minimum wages, maximum work hours, and other conditions for persons employed in certain "household occupations." (Cal. Code Regs., tit. 8, § 11150, subd. (1) (1986) [renumbered, Order 15-86].) As stated above, it requires that all records maintained under section 1174 be "kept on file by the employer at least three years."
No contention is raised that the unverified petition was statutorily improper. (See Code Civ. Proc., § 446.) Bulmash emphasizes this fact solely for purposes of his Fourth Amendment challenge.
Our record indicates that the Fifth Amendment question first appeared in this case when raised by the Commissioner on appeal. Since Bulmash also discussed this issue in his reply brief, the Court of Appeal addressed it in order to guide any further proceedings in the superior court. In light of this procedural posture, we will not address the Commissioner's argument here that Bulmash has raised this claim prematurely, in the absence of "specific questions posed to [him] in an actual legal proceeding."
The FLSA establishes various civil and criminal penalties for violations of wage, hour, and age limits on employment. (See 29 U.S.C. § 201 et seq.)
The Commissioner cites some cases which do discuss Fourth Amendment privacy expectations with regard to records kept pursuant to administrative mandate, but they are of little help here. (Set McLaughlin v. Kings Island (6th Cir. 1988) 849 F.2d 990; McLaughlin v. A.B. Chance Co. (4th Cir. 1988) 842 F.2d 724; Brock v. Emerson Elec. Co., Electronic & Space Div. (11th Cir. 1987) 834 F.2d 994.) These cases not only reach divergent results under the same basic facts and worker-safety regulation, but also concern inspections of records conducted on private commercial premises in the absence of a warrant or subpena.
Bulmash alternatively argues that probable cause in the criminal sense is required to enforce this subpena under article I, section 13 of the California Constitution, which prohibits "unreasonable seizures and searches." We disagree. Having reviewed the case authorities addressing this argument under the Fourth Amendment, we find them persuasive in disposing of Bulmash's state constitutional claim. (See also Paladini v. Superior Court (1918) 178 Cal. 369, 373 [173 P. 588].)
The Fifth Amendment states, in pertinent part, that no "person" shall "be compelled in any criminal case to be a witness against himself." It has long been clear that this privilege belongs only to individuals. (Braswell v. United States (1988) 487 U.S. 99, 105-116 [101 L.Ed.2d 98, 106-113, 108 S.Ct. 2284].) A person compelled to produce records which belong to another entity and which he holds in a "representational capacity" may not assert the privilege for himself, even though compliance may incriminate him. (id. at p. 110 [101 L.Ed.2d at p. 109.) The Commissioner insists that this rule applies to Bulmash, because he was obligated to prepare and maintain the instant employment records in his capacity as trustee for the Gluck trust. We decline to address this narrow question. The abbreviated record in this case contains insufficient evidence from which to assess Bulmash's legal capacity and obligations with regard to his sister.
It is well settled that a person can assert the privilege only to prevent "being incriminated by his own compelled testimonial communications." (Fisher v. United States (1976) 425 U.S. 391, 409 [48 L.Ed.2d 39, 55, 96 S.Ct. 1569].) The contents of subpenaed business records which have been voluntarily prepared are not privileged, because they were not made under compulsion. (United States v. Doe (1984) 465 U.S. 605, 610-611 [79 L.Ed.2d 552, 558-559, 104 S.Ct. 1237].) Bulmash attempts to distinguish his case on grounds that creation of wage and hour records is compelled by section 1174. However, as we will make clear, a special analysis for "required records" precludes a finding of privilege.
Bulmash also insists that producing the records under compulsion of the subpena constitutes an incriminating, testimonial, and privileged act. The Court of Appeal agreed. It cited statements made in Fisher, supra, 425 U.S. at page 410 [48 L.Ed.2d at pages 55-56], and repeated in Doe, supra, 465 U.S. at page 613 [79 L.Ed.2d at page 560], that such compliance may be privileged because it "tacitly concedes" that the papers exist, that the subpenaed party possesses them, and that they are authentic. However, these cases made clear that the court was not referring to statutorily "required records." (Fisher, supra, at p. 410, fn. 11 [48 L.Ed.2d at p. 55]; Doe, supra, at p. 607, fn. 3 [79 L.Ed.2d at p. 557].) And, no high court case specifically addressing required records has distinguished between their contents and the act of production for purposes of determining whether the privilege applies. In any event, since section 1174 requires that the subpenaed wage and hour records be kept for inspection, the Division already assumes that the papers exist, that Bulmash possesses them, and that they are authentic.
We also reject Bulmash's related claim that enforcement of the subpena may compel him to explicitly or implicitly reveal that he has not kept the records as required by law. While the nonkeeping of records may indeed incriminate an employer (§ 1175), simple logic precludes us from finding that the act of not writing or preparing documents (i.e., no act) is "testimonial" in the constitutional sense. (See generally Schmerber v. California (1966) 384 U.S. 757, 765 [16 L.Ed.2d 908, 916-917, 86 S.Ct. 1826] ["Since the blood test evidence, although an incriminating product of compulsion, was neither petitioner's testimony nor evidence relating to some communicative act or writing by the petitioner, it was not inadmissible on privilege grounds."].)
Bulmash also asserts that unconditional enforcement of this administrative subpena violates California's constitutional prohibition against compulsory self-incrimination. (Cal. Const., art. I, § 15.) However, our approach is consistent with prior treatment of the state constitutional privilege.
In Paladini v. Superior Court, supra, 178 Cal. 369, the "state market director" obtained a court order compelling compliance with an authorized subpena for records which petitioners were required to produce under a scheme regulating the fishing industry. (Stats. 1917, ch. 803, § 26, subds. (a), (b), pp. 1680-1681.) The director was authorized to use the records in "investigations concerning all matters" under the act, including license-revocation inquiries. (Ibid.; see also § 6, p. 1675; Palidini, supra, at pp. 372-373.) Even though violations of several other sections of the act were "misdemeanors]" made expressly "punishable" by fine and/or imprisonment (Stats. 1917, ch. 803, § 27, p. 1681), this court concluded that administrative proceedings thereunder were "not criminal" in nature, and rejected petitioners' claim that enforcement of the subpena violated the state constitutional prohibition against compelled self-incrimination. (Paladini, supra, at p. 373.)
Here, the dissenting justices present no persuasive reason for departing from Paladini at this late date. For purposes of Bulmash's federal and state constitutional claims, the instant subpena seeks records which are "indispensable" to implementing an "essentially regulate ry" goal. {Byers, supra, 402 U.S. at pp. 430-431 [29 L.Ed.2d at pp. 18-19]; see also cone. opn. of Harlan, J. at p. 456 [29 L.Ed.2d at pp. 33-34].)