BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 240
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          ASSEMBLY THIRD READING
          AB 240 (Bonilla)
          As Amended  March 8, 2011
          Majority vote 

           LABOR & EMPLOYMENT          5-1                                 
           
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          |Ayes:|Swanson, Alejo, Allen,    |     |                          |
          |     |Furutani, Yamada          |     |                          |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Miller                    |     |                          |
          |     |                          |     |                          |
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           SUMMARY  :  This bill authorizes the Labor Commissioner (LC) 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 LC 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 LC 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 (California Labor 








                                                                  AB 240
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          Code, Section 1194) or the employee may file an administrative 
          complaint  with the LC and go through what is known as the 
          "Berman" hearing process (California Labor Code, Section 98).  
          Through a private right of action under Labor Code Section 
          11944, an employee is entitled to recover the full amount of the 
          unpaid balance of wages, including interest, reasonable 
          attorney's fees and costs of suit.  In addition, Labor Code 
          Section 1194.2 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 
          LC does not have specific authorization to grant liquidated 
          damages for unpaid minimum wages.  Under Labor Code Section 98, 
          the LC 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" process.   

          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 
          complaint processes by clarifying existing statutes 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 Law 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% 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% of workers were 
          underpaid by more than $1.00 per hour and the median 








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          underpayment was $1.65 per hour. 

          In 2009, the Bureau of Field Enforcement (BOFE) conducted a 
          total of 9,053 inspections, resulting in a total of 4,465 
          citations.  According to the BOFE's 2009 Annual Report on the 
          Effectiveness of Bureau of Field Enforcement, there were 113 
          citations issued to employers for failing to pay the minimum 
          wage.  In response to these violations, BOFE assessed $393,350 
          in penalties in 2009, of which they collected $74,035.

          The California Rural Legal Assistance Foundation (CRLAF) states 
          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 
          statutes.  The Teamsters Public Affairs Council asserts that 
          this bill will eliminate the current disincentive for aggrieved 
          workers to pursue their claims administratively.  The Women's 
          Employment Rights Clinic of Golden Gate University School of 
          Law, states 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 Code.  

           
          Analysis Prepared by  :    Shannon McKinley / L. & E. / (916) 
          319-2091 


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