OAKLAND -- The state Department of Industrial Relations filed a $17 million lawsuit Monday against Emeryville-based ZipRealty, claiming the firm has failed to properly compensate its employees since at least 2006.

The lawsuit, filed in Alameda County Superior Court, is based on three class-action lawsuits filed against ZipRealty and complaints waged by four employees working for the realtor's Kern County office.

ZipRealty settled the class-action lawsuits for an unspecified sum and was forced to pay its Kern County-based workers $330,000 in past wages and penalties.

The state's lawsuit hopes to recoup past wages not paid to other employees who have not joined the class-action lawsuits or who have not filed formal complaints with the state.

"It is our job to provide basic protections for all employees working in California," said Christine Baker, acting director of the Department of Industrial Relations. "Wage compression and violations of the minimum labor standards are now occurring in a wide variety of occupations, even affecting employees outside traditional low-wage occupations."

According to the lawsuit, ZipRealty repeatedly refused to pay its real estate agents overtime, neglected to pay them for hours spent in mandatory training seminars, failed to pay a minimum wage and refused to pay employees who are fired or laid-off a final paycheck that fully covers the hours they worked.

The claims cover a time period ranging from 2006 until Monday.


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Talia DeBene, a spokeswoman for ZipRealty, declined to comment.

The company has argued in past cases that it did not have to pay its agents a minimum wage or overtime because it considered agents "outside sales persons" who work on a contract basis. But a federal judge ruled earlier this month that the agents are employees required to receive minimum wage and overtime.

"We learned in the course of the Bakersfield case that ZipRealty real estate agents frequently received no pay at all," said Labor Commissioner Julie Su. "The lawsuit filed today seeks to remedy the multiple violations statewide and to get these workers the wages they earned."

How ZipRealty would pay its damages should the state win its suit remains to be seen. The company has reported annual income losses every year since 2006, according to its 2009 annual report. In 2009, ZipRealty lost almost $13 million, the report states.

Nevertheless, the state believes it's important to set an example by showing that all firms in the state are responsible for paying its employees properly.

"This enforcement is important not just for employees, but for hardworking employers who shouldn't have to compete against lawbreakers," Su said. "We want the message to be clear."