BILL ANALYSIS Ó
AB 197
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Date of Hearing: April 13, 2011
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Sandre Swanson, Chair
AB 197 (Monning) - As Introduced: January 27, 2011
SUBJECT : Recovery of wages: liquidated damages.
SUMMARY : Increases the amount of liquidated damages that may
be awarded to an employee when an employer fails to pay minimum
wage to two times the wages unlawfully unpaid, plus interest.
EXISTING FEDERAL LAW establishes the Fair Labor Standards Act of
1938, which sets a federal minimum wage, with specified
exceptions.
EXISTING STATE LAW :
1)Sets the minimum wage for all employees in California, with
limited exceptions, and prohibits employers, unless specified,
from paying less than the state minimum wage.
2)Establishes the Industrial Wage Commission (IWC) to, among
other duties, review the adequacy of the minimum wage every
two years.
3)Permits an individual to sue his or her employer, in a civil
action, for liquidated damages in an amount that is equal to
the wages unlawfully unpaid, plus interest, when the employer
pays that individual less than the minimum wage.
FISCAL EFFECT : Unknown
COMMENTS : According to the sponsor of this bill, the California
Rural Legal Assistance
Foundation (CRLAF), this bill doubles the amount of liquidated
damages that could be assessed
against an employer who fails to pay minimum wages and would
bring California into alignment
with ten other states which have recently enacted similar
legislation in an effort to deter wage
theft in the underground economy.
CRLAF states this bill is in response to the ongoing
underfunding of the Division of Labor
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Standards (DLSE) and that DLSE currently has fewer authorized
positions for enforcement staff
than it had in 1980, which inhibits its ability to find, cite
and collect civil penalties for minimum
wage violations.
The author's office points out there is substantial evidence of
widespread minimum wage
violations in California, particularly in the underground
economy. UCLA's 2010 report, Wage
Theft and Workplace Violations in Los Angeles , found that 29.7%
of workers surveyed in Los
Angeles County were paid below the state minimum wage. The Ford
Foundation cited in its
2009 report, Broken Laws, Unprotected Workers , that depending on
the industry or occupation,
between 40% and 60% of workers were not paid the minimum wage.
Enforcement Activities in California:
DLSE investigates complaints and takes enforcement actions to
ensure employees are not being required or permitted to work
under unlawful conditions. Enforcement action taken by DLSE
investigators involves the enforcement of child labor laws; the
requirement of employers to carry workers' compensation
insurance coverage; audits of payroll records, collection of
unpaid minimum wages, overtime, as well as prevailing and other
unpaid wages; the issuance of civil and criminal citations; the
confiscation of illegally manufactured garments; and injunctive
relief to preclude further violations of the law.
In the calendar year 2009 (the most recent year for which data
is available); there were a total of 9,053 inspections
conducted, resulting in a total of 4,465 citations. The single
largest source of violations and citations was the failure to
carry workers' compensation insurance with 2,257 citations in
2009.
In 2009, there were 113 citations issued for minimum wage
violations, fewer than the 135 citations issued in 2008. In
2006, only 32 citations were issued for minimum wage violations.
PRIOR LEGISLATION :
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AB 1881 (Monning) of 2010 was nearly identical to this bill and
was vetoed by the Governor. In his veto message he stated in
part, "the recoveries and penalties are already available to
employees and that there was nothing indicating California's
minimum wage law was lacking."
ARGUMENTS IN SUPPORT : Proponents concur with the sponsor of
this bill stating that it will bring California into the
mainstream with other states that have recently increased
damages paid to workers when their employers cheat them out of
the state's respective minimum wages. They state that this bill
is a response to the chronic underfunding of the Division of
Labor Standards Enforcement (DLSE) which inhibits its ability to
detect, cite and collect civil penalties for minimum wage
violations, particularly in the underground economy. They
assert that DLSE's underfunding also significantly undercuts its
ability to collect unpaid wages.
The California Teamsters Public Affairs Council, amongst others,
argues that under existing law, in a court action to recover
wages unpaid for minimum wage, the court may award liquidated
damages equal to the amount of unlawfully unpaid wages, plus
interest. They also state this remedy enhancement will promote
compliance by California employers with California's minimum
wage requirements.
ARGUMENTS IN OPPOSITION : The Civil Justice Association of
California, the California Chamber of Commerce, the Western
Growers, California Framing Contractors Association, and the
California Hotel & Lodging Association, amongst others, strongly
oppose this bill stating that the current availability of
liquidated damages for minimum wage violations, let alone any
expansion of them, is unjustified and oppressive. They state
that liquidated damages are a type of punitive damages that may
be awarded in addition to the underpaid wages owed, interest on
the underpaid wages and statutory penalties per pay period that
employers must pay to make an employee whole. Finally, they
argue that California's employers are already subject to an
expansive number of wage and hour laws, regulations and
substantial penalties for each.
REGISTERED SUPPORT / OPPOSITION :
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Support
Asian Pacific American Legal Center
CA Conference Board of the Amalgamated Transit Union
CA Conference of Machinists
CA Official Court Reporters Association
California Employment Lawyers Association
California Labor Federation, AFL-CIO
California Nurses Association
California Rural Legal Assistance Foundation (Sponsor)
California Teamsters Public Affairs Council
Centro Legal de la Raza
Engineers and Scientists of California
International Longshore and Warehouse Union
National Nurses Organizing Committee
Professional and Technical Engineers, Local 21
SCOPE, Laborers International Union of North America
UNITE HERE!
United Food and Commercial Workers-Western States Conference
Utility Workers Union of America, Local 132
Women's Employment Rights Clinic of Golden Gate University
School of Law
Worksafe, Inc.
Opposition
Associated Builders and Contractors of California
California Association for Health Services at Home
California Association of Bed and Breakfast Inns
California Association of Health Facilities
California Beer and Beverage Distributors
California Chamber of Commerce
California Farm Bureau Federation
California Framing Contractors Association
California Grocers Association
California Hospital Association
California Hotel & Lodging Association
California Retailers Association
Civil Justice Association of California
Western Electrical Contractors Association
Western Growers
Analysis Prepared by : Lorie Erickson / L. & E. / (916)
319-2091
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