BILL ANALYSIS Ó AB 240 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 240 (Bonilla) As Amended July 11, 2011 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |50-22|(May 5, 2011) |SENATE: |24-15|(August 18, | | | | | | |2011) | ----------------------------------------------------------------- Original Committee Reference: L. & E. SUMMARY : Authorizes the Labor Commissioner (LC) to recover liquidated damages for an employee who brings a complaint alleging payment of less than the minimum wage and prevents a chaptering out conflict with AB 197 (Monning) of 2011 and AB 469 (Swanson) of 2011. The Senate amendments prevent a chaptering out conflict with AB 197 (Monning) and AB 469 (Swanson). 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. AS PASSED BY THE ASSEMBLY , this bill authorized the Labor Commissioner (LC) to recover liquidated damages for an employee who brings a complaint alleging payment of less than the minimum wage. AB 240 Page 2 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 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 AB 240 Page 3 Report notes that 63.3% 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 (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 FN: 0001633