BILL ANALYSIS                                                                                                                                                                                                    

                                                                     AB 240
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        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.   


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         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" 

        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 


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        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 

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