BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 240
                                                                  Page  1

          Date of Hearing:   April 13, 2011

                                Sandre Swanson, Chair
                    AB 240 (Bonilla) - As Amended:  March 8, 2011
          SUBJECT  :   Compensation recovery actions: liquidated damages.

           SUMMARY  :   This bill authorizes the Labor Commissioner to 
          recover liquidated damages for an employee who brings a 
          complaint alleging payment of less than the minimum wage.   

           EXISTING LAW  : 

          1)Establishes the Division of Labor Standards Enforcement (DLSE) 
            within the Department of Industrial Relations (DIR) to enforce 
            minimum labor standards.

          2)Creates the Labor Commissioner to serve as the Chief of DLSE 
            and, among other duties, adjudicate wage claims and enforce 
            the Industrial Welfare Commission wage orders. 

          3)Grants employees the right to file a civil action to recover 
            unpaid minimum wages.

             a)   Entitles employees who file a civil suit to recover 
               liquidated damages in an amount equal to the amount of 
               wages unlawfully unpaid.

          4)Affords workers an alternative administrative remedy through 
            the Labor Commissioner to recover unpaid wages.  

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   

          Under current law, California workers have two avenues to 
          recover unpaid minimum wages. An employee may either file a 
          civil action to recover unpaid wages (CA Labor Code, Section 
          1194) or the employee may file an administrative complaint  with 
          the Labor Commissioner and go through what is known as the 
          "Berman" hearing process (CA Labor Code, Section 98).  Through a 
          private right of action under Section 11944 of the state's Labor 
          Code, an employee is entitled to recover the full amount of the 
          unpaid balance of wages, including interest, reasonable 


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          attorney's fees and costs of suit.  In addition, Section 1194.2 
          of the state's Labor Code specifically entitles an aggrieved 
          worker to liquidated damages in an amount equal to the wages 
          unlawfully unpaid and interest thereon.

          In contrast, if an employee uses the administrative process to 
          recover unpaid wages through the "Berman" hearing process, the 
          Labor Commissioner does not have specific authorization to grant 
          liquidated damages for unpaid minimum wages.  Under Section 98 
          of the state's Labor Code, the Labor Commissioner has the 
          authority to recover wages, penalties, and other demands for 
          compensation." State law is silent on the issue of whether an 
          employee can recover liquidated damages through the "Berman" 

          According to the author, this bill will provide equity for 
          minimum wage workers that have been victims of wage violation by 
          their employers. The author states that workers who have been 
          victims of minimum wage violations have been particularly 
          unlikely to have a claim sufficient to attract an attorney, 
          pushing these workers to seek relief through the administrative 
          process.  The author notes, however, that the inequity in 
          current law has the effect of providing less relief to these 
          minimum wage workers. The author asserts that minimum wage 
          workers deserve the same protections from wage violations as all 
          other employees and this bill establishes equity between wage 
          complain processes by clarifying existing statute to ensure that 
          workers receive the same relief for minimum wage violations, 
          regardless of whether they purse their clams administratively or 
          through the courts. 

          A 2010 report titled, "Wage Theft and Workplace Violations: The 
          Failure of Employment and Labor Las for Low-Wage Workers," (Wage 
          Theft Report) released by the Institute for Research on Labor 
          and Employment at the University of California, Los Angeles, 
          found that 29.7 percent of the Los Angeles workers sampled were 
          paid less than the minimum wage in the work week preceding the 
          survey.  The Wage Theft Report notes that 63.3 percent of 
          workers were underpaid by more than $1.00 per hour and the 
          median underpayment was $1.65 per hour. 

          In 2009, the Bureau of Field Enforcement (BFE) conducted a total 
          of 9,053 inspections, resulting in a total of 4,465 citations.  
          According to the BFE's 2009 Annual Report on the Effectiveness 


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          of Bureau of Field Enforcement, there were 113 citations issued 
          to employers for failing to pay the minimum wage.  In response 
          to these violations, BFE assessed $393,350 in penalties in 2009, 
          of which they collected $74,035.


          In support, the California Rural Legal Assistance Foundation 
          (CRLAF) writes that this bill brings remedies for minimum wage 
          violations into accord with other Labor Code wage-related 
          protections. CRLAF notes that this bill is consistent with the 
          public policy supporting awards of liquidated damages under 
          other wage-related statues.  The Teamsters Public Affairs 
          Council, writing in support of the bill, asserts that this bill 
          will eliminate the current disincentive for aggrieved workers to 
          pursue their claims administratively. In their letter of 
          support, the Women's Employment Rights Clinic of Golden Gate 
          University School of Law, write that they have represented low 
          wage workers for over 17 years, and one of the most difficult 
          things that they encounter is explaining to workers that they 
          cannot seek liquidated damages when they choose to pursue their 
          minimum wage violation claims through the simpler and less 
          costly administrative process established by the state's Labor 


          AB 448 (Arambula) of 2007 would have allowed employees to 
          recover liquidated damages in complaints brought before the 
          Labor commissioner alleging payment of less than the state 
          minimum wage. This bill was vetoed by the Governor. In his veto 
          message, the Governor wrote that he was concerned that allowing 
          liquidated damages on administrative claims would be harmful to 
          small business. The Governor also stated that he saw no reason 
          to expose employers to additional liabilities when other legal 
          avenues already exist for employees and attorneys who are intent 
          on seeking liquidated damages.


          California Conference Board of the Amalgamated Transit Union
          California Conference of Machinists


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          California Employment Lawyers Association
          California Labor Federation, AFL-CIO
          California Nurses Association/National Nurses Organizing 
          California Official Court Reporters Association
          California Rural Legal Assistance Foundation (Sponsor)
          California Teamsters Public Affairs Council
          Engineers and Scientist of California
          Golden Gate University School of Law Women's Employment Rights 
          International Longshore and Warehouse Union
          National Lawyers Guild Labor & Employment Committee
          Professional and Technical Engineers, Local 21
          SCOPE, Laborers International Union of North America
          UNITED HERE!
          Utility Workers Union of America, Local 132
          Worksafe, Inc.

          None on file.
          Analysis Prepared by  :    Shannon McKinley / L. & E. / (916)