BILL ANALYSIS Ó
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 240|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AB 240
Author: Bonilla (D)
Amended: 6/2/11 in Senate
Vote: 21
SENATE LABOR & INDUSTRIAL REL. COMMITTEE : 4-2, 6/8/11
AYES: Lieu, DeSaulnier, Leno, Yee
NOES: Wyland, Runner
NO VOTE RECORDED: Padilla
ASSEMBLY FLOOR: 50-22, 5/5/11 - See last page for vote
SUBJECT : Compensation recovery actions: liquidated
damages
SOURCE : California Rural Legal Assistance Foundation
DIGEST : 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,
and also provides that if an employer demonstrates to the
satisfaction of the Labor Commissioner that the failure to
pay the minimum wage was in good faith and that the
employer had reasonable grounds for believing that the act
or omission was not a violation of minimum wage law or
regulations, the Labor Commissioner may, in its discretion,
refuse to award liquidated damages or award a lesser amount
of liquidated damages to the employee.
ANALYSIS :
CONTINUED
AB 240
Page
2
Existing law
1. Sets a 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 to, among
other duties, review the adequacy of the minimum wage
every two years.
3. Provides the Labor Commissioner with the authority to
investigate employee complaints and allows the Labor
Commissioner to hold a hearing in any action to recover
wages, including orders of the Industrial Welfare
Commission. The Labor Commissioner may require an award
in the amount of the wages owed, plus interest.
Existing Civil Code sets the interest rate at 10
percent.
4. Allows for liquidated damages when construction workers
are denied wages from contractors or subcontractors, as
well as employees in the garment manufacturing industry.
The liquidated damages owed are equal to the balance of
unpaid wages
5. Permits an individual to seek recovery through a civil
suit of the unpaid balance of the minimum wage,
including interest, attorney fees, and costs of the
suit.
6. Requires that if an employee is found to have been paid
less than the minimum wage, that employee must be paid
liquidated damages in an amount that is equal to the
wages unlawfully unpaid, plus interest. Existing Civil
Code sets the interest rate at 10 percent.
7. Provides that if an employer demonstrates to the
satisfaction of the court that the failure to pay the
minimum wage was in good faith and that the employer had
reasonable grounds for believing that the act or
omission was not a violation of minimum wage law or
regulations, the court may, in its discretion, refuse to
AB 240
Page
3
award liquidated damages or award a lesser amount of
liquidated damages to the employee.
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, and also
provides that if an employer demonstrates to the
satisfaction of the Labor Commissioner that the failure to
pay the minimum wage was in good faith and that the
employer had reasonable grounds for believing that the act
or omission was not a violation of minimum wage law or
regulations, the Labor Commissioner may, in its discretion,
refuse to award liquidated damages or award a lesser amount
of liquidated damages to the employee.
Comments
Currently, California workers have two avenues to recover
unpaid minimum wages. An employee may either file a civil
action to recover unpaid wages or the employee may file an
administrative complaint with the Labor Commissioner. As
was discussed above, an employee who waged a successful
civil action to receive unpaid minimum wage balances would
be entitled to recover the full amount of the unpaid
balance of wages, including interest, reasonable attorney's
fees and costs of suit. Liquidated damages could then also
be awarded. Additionally, the employee may be able to
pursue additional penalties and amounts if the practice was
unfair competition
In contrast, if an employee uses the administrative process
to recover unpaid wages through the Labor Commissioner
hearing process, the Labor Commissioner does not have
specific authorization to grant liquidated damages for
unpaid minimum wages. Under existing law, the Labor
Commissioner only has the authority to recover wages,
penalties, and other demands for compensation.
As such, the author and proponents believe that this bill
provides equity for minimum wage workers, as workers who
have been victims of minimum wage violations have been
unlikely to have a claim sufficient to attract an attorney,
pushing these workers to seek relief through the
administrative process. Additionally, some supporters have
AB 240
Page
4
noted that existing law creates a disincentive to pursue
claims through administrative hearings due to the lack of
liquidated damages, which this bill seeks to address.
Prior Legislation
AB 448 (Arambula) of 2007, which was nearly identical to
this bill, 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 Governor
Schwarzenegger.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/9/11)
California Rural Legal Assistance Foundation (source)
California Conference Board of the Amalgamated Transit
Union
California Conference of Machinists
California Labor Federation
California Nurses Association
California Teamsters Public Affairs Council
Engineers and Scientists of California
International Longshore and Warehouse Union
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
OPPOSITION : (Verified 6/9/11)
California Association for Health Services at Home
California Association of Bed & Breakfast Inns
California Chamber of Commerce
California Chapter of the American Fence Association
California Farm Bureau Federation
California Fence Contractors Association
California Grocers Association
California Hospital Association
AB 240
Page
5
California Hotel and Lodging Association
California Independent Grocers Association
California League of Food Processors
California Manufacturers & Technology Association
California Retailers Association
Engineering Contractors Association
Flasher Barricade Association
Marin Builders Association
ARGUMENTS IN SUPPORT : Supporters of this bill note that
it is the most vulnerable workers in the California
workforce who are paid the minimum wage and are most likely
to suffer from wage theft. Supporters argue that this bill
brings remedies for minimum wage violations into accord
with other Labor Code wage-related protections, and that
this bill is consistent with the public policy supporting
awards of liquidated damages under other wage-related
statues. Moreover, supports also believe that this bill
will remove the current disincentive for aggrieved workers
to pursue their claims administratively.
ARGUMENTS IN OPPOSITION : Opponents of the bill, which
includes the California Chamber of Commerce, believes that
allowing a deputy Labor Commissioner to award liquidated
damages is both unprecedented and unnecessary. Opponents
believe that existing California wage protections are
sufficient to protect workers. Further, opponents believe
that California's existing labor laws and regulatory are
burdensome and impacts job creation and business expansion
and relocation.
ASSEMBLY FLOOR :
AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block,
Blumenfield, Bonilla, Bradford, Brownley, Buchanan,
Butler, Charles Calderon, Campos, Carter, Chesbro, Davis,
Dickinson, Eng, Feuer, Fong, Fuentes, Galgiani, Gatto,
Gordon, Hall, Hayashi, Roger Hernández, Hill, Huber,
Hueso, Huffman, Lara, Bonnie Lowenthal, Ma, Mendoza,
Mitchell, Monning, Pan, Perea, V. Manuel Pérez,
Portantino, Skinner, Solorio, Swanson, Torres,
Wieckowski, Williams, Yamada, John A. Pérez
NOES: Achadjian, Bill Berryhill, Conway, Cook, Donnelly,
Fletcher, Grove, Hagman, Halderman, Harkey, Jeffries,
Knight, Logue, Mansoor, Miller, Morrell, Nestande, Norby,
AB 240
Page
6
Olsen, Silva, Smyth, Wagner
NO VOTE RECORDED: Cedillo, Furutani, Garrick, Gorell,
Jones, Nielsen, Valadao, Vacancy
PQ:do 6/9/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****