BILL ANALYSIS Ó
AB 197
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 197 (Monning)
As Amended June 2, 2011
Majority vote
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|ASSEMBLY: |48-22|(May 5, 2011) |SENATE: |24-11|(August 30, |
| | | | | |2011) |
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Original Committee Reference: L. & E.
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 and
ensure there will be no chaptering out conflict with AB 240
(Bonilla).
The Senate amendments prevent a chaptering out conflict with AB
240 (Bonilla) of 2011.
AS PASSED BY THE ASSEMBLY , this bill increased 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.
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
10 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
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
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in the underground economy. The University of California,
LosAngeles'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.
Prior Legislation : AB 1881 (Monning) of 2010 was nearly
identical to this bill and was vetoed by Governor
Schwarzenegger. 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
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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.
Analysis Prepared by : Lorie Erickson / L. & E. / (916)
319-2091
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