BILL NUMBER: AB 469 AMENDED BILL TEXT AMENDED IN SENATE JUNE 14, 2011 AMENDED IN ASSEMBLY MAY 27, 2011 AMENDED IN ASSEMBLY MAY 3, 2011 AMENDED IN ASSEMBLY APRIL 14, 2011 AMENDED IN ASSEMBLY APRIL 7, 2011 AMENDED IN ASSEMBLY MARCH 31, 2011 INTRODUCED BY Assembly Member Swanson (Coauthor: Assembly Member Huffman) FEBRUARY 15, 2011 An act to amend Sections 98, 226, 240, 243, and 1174 of, and to add Sections 200.5, 1194.3, 1197.2, 1206, and 2811 to, the Labor Code, relating to employment. LEGISLATIVE COUNSEL'S DIGEST AB 469, as amended, Swanson. Employees: wages. (1) Existing law authorizes the Labor Commissioner to investigate and enforce statutes and orders of the Industrial Welfare Commission that, among other things, specify the requirements for the payment of wages by employers. Existing law provides for criminal and civil penalties for violations of statutes and orders of the commission regarding payment of wages. This bill would make it a misdemeanor if an employer willfully violates specified wage statutes or orders, or willfully fails to pay a final court judgment or final order from the Labor Commissioner for wages due. (2) Existing law provides that an action by the Division of Labor Standards Enforcement within the Department of Industrial Relations for collection of a statutory penalty or fee must be commenced within one year after the penalty or fee became final. This bill would extend the period within which the division may commence a collection action, as defined, from one year to 3 years.
(2)(3) Existing law permits the Labor Commissioner to require an employer who has been convicted of a subsequent wage violation or who has failed to satisfy a judgment to post a bond in order to continue business operations. This bill would extend the time required for a subsequently convicted employer to maintain a bond from 6 months to 2 years and would require that a subsequently convicted employer provide an accounting of assets, as specified, to the Labor Commissioner. (3)(4) Existing law requires an employer to post specified wage and hour information in a location where it can be viewed by employees. This bill would require an employer to provide each employee, at the time of hiring, with a notice that specifies the rate and the basis, whether hourly, salary, commission, or otherwise, of the employee's wages. No notice would be required for an employee who is employed by the state or any subdivision thereof, exempt from the payment of overtime, or covered by a collective bargaining agreement containing specified information. (4)(5) In addition to the crime and employer obligations imposed by this bill, the Labor Code provides for other work-related standards and duties that, upon violation, are subject to specified penalties. This bill would state that the Labor Code establishes minimum penalties for failure to comply with wage-related statutes and regulations. Because this bill would create a new crime or expand the definition of a crime, it would impose a state-mandated local program. (5)(6) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. This act shall be known and may be cited as the Wage Theft Prevention Act of 2011. SEC. 2. Section 98 of the Labor Code is amended to read: 98. (a) The Labor Commissioner is authorized to investigate employee complaints. The Labor Commissioner may provide for a hearing in any action to recover wages, penalties, and other demands for compensation properly before the division or the Labor Commissioner, including orders of the Industrial Welfare Commission, and shall determine all matters arising under his or her jurisdiction. It is within the jurisdiction of the Labor Commissioner to accept and determine claims from holders of payroll checks or payroll drafts returned unpaid because of insufficient funds, if, after a diligent search, the holder is unable to return the dishonored check or draft to the payee and recover the sums paid out. Within 30 days of the filing of the complaint, the Labor Commissioner shall notify the parties as to whether a hearing will be held, whether action will be taken in accordance with Section 98.3, or whether no further action will be taken on the complaint. If the determination is made by the Labor Commissioner to hold a hearing, the hearing shall be held within 90 days of the date of that determination. However, the Labor Commissioner may postpone or grant additional time before setting a hearing if the Labor Commissioner finds that it would lead to an equitable and just resolution of the dispute. A party who has received actual notice of a claim before the Labor Commissioner shall, while the matter is before the Labor Commissioner, notify the Labor Commissioner in writing of any change in that party's business or personal address within 10 days after the change in address occurs. It is the intent of the Legislature that hearings held pursuant to this section be conducted in an informal setting preserving the rights of the parties. (b) When a hearing is set, a copy of the complaint, which shall include the amount of compensation requested, together with a notice of time and place of the hearing, shall be served on all parties, personally or by certified mail, or in the manner specified in Section 415.20 of the Code of Civil Procedure. (c) Within 10 days after service of the notice and the complaint, a defendant may file an answer with the Labor Commissioner in any form as the Labor Commissioner may prescribe, setting forth the particulars in which the complaint is inaccurate or incomplete and the facts upon which the defendant intends to rely. (d) No pleading other than the complaint and answer of the defendant or defendants shall be required. Both shall be in writing and shall conform to the form and the rules of practice and procedure adopted by the Labor Commissioner. (e) Evidence on matters not pleaded in the answer shall be allowed only on terms and conditions the Labor Commissioner shall impose. In all these cases, the claimant shall be entitled to a continuance for purposes of review of the new evidence. (f) If the defendant fails to appear or answer within the time allowed under this chapter, no default shall be taken against him or her, but the Labor Commissioner shall hear the evidence offered and shall issue an order, decision, or award in accordance with the evidence. A defendant failing to appear or answer, or subsequently contending to be aggrieved in any manner by want of notice of the pendency of the proceedings, may apply to the Labor Commissioner for relief in accordance with Section 473 of the Code of Civil Procedure. The Labor Commissioner may afford this relief. No right to relief, including the claim that the findings or award of the Labor Commissioner or judgment entered thereon are void upon their face, shall accrue to the defendant in any court unless prior application is made to the Labor Commissioner in accordance with this chapter. (g) All hearings conducted pursuant to this chapter are governed by the division and by the rules of practice and procedure adopted by the Labor Commissioner. (h) (1) Whenever a claim is filed under this chapter against a person operating or doing business under a fictitious business name, as defined in Section 17900 of the Business and Professions Code, which relates to the person's business, the division shall inquire at the time of the hearing whether the name of the person is the legal name under which the business or person has been licensed, registered, incorporated, or otherwise authorized to do business. (2) The division may amend an order, decision, or award to conform to the legal name of the business or the person who is the defendant to a wage claim, if it can be shown that proper service was made on the defendant or his or her agent, unless a judgment had been entered on the order, decision, or award pursuant to subdivision (d) of Section 98.2. The Labor Commissioner may apply to the clerk of the superior court to amend a judgment that has been issued pursuant to a final order, decision, or award to conform to the legal name of the defendant, if it can be shown that proper service was made on the defendant or his or her agent. SEC. 3. Section 200.5 is added to the Labor Code , to read: 200.5. (a) Notwithstanding any provision of this code or Section 340 of the Code of Civil Procedure, to collect a civil penalty, fee, or penalty fee under this division, the Division of Labor Standards Enforcement shall commence an action within three years from the date the penalty or fee became final. Upon commencement of an action, the clerk of the superior court shall enter judgment immediately in conformity therewith. (b) This section applies only to penalty assessments or fees that became final on or after the effective date of the act adding this section. (c) For purposes of this section, "commence an action" means to file a request for entry of judgment on a civil penalty or fee with the clerk of the superior court of the relevant county. SEC. 3.SEC. 4. Section 226 of the Labor Code is amended to read: 226. (a) Every employer shall, semimonthly or at the time of each payment of wages, furnish each of his or her employees, either as a detachable part of the check, draft, or voucher paying the employee's wages, or separately when wages are paid by personal check or cash, an accurate itemized statement in writing showing (1) gross wages earned, (2) total hours worked by the employee, except for any employee whose compensation is solely based on a salary and who is exempt from payment of overtime under subdivision (a) of Section 515 or any applicable order of the Industrial Welfare Commission, (3) the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis, (4) all deductions, provided that all deductions made on written orders of the employee may be aggregated and shown as one item, (5) net wages earned, (6) the inclusive dates of the period for which the employee is paid, (7) the name of the employee and his or her social security number, except that by January 1, 2008, only the last four digits of his or her social security number or an employee identification number other than a social security number may be shown on the itemized statement, (8) the name and address of the legal entity that is the employer, and (9) all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee. The deductions made from payments of wages shall be recorded in ink or other indelible form, properly dated, showing the month, day, and year, and a copy of the statement and the record of the deductions shall be kept on file by the employer for at least three years at the place of employment or at a central location within the State of California. (b) An employer that is required by this code or any regulation adopted pursuant to this code to keep the information required by subdivision (a) shall afford current and former employees the right to inspect or copy the records pertaining to that current or former employee, upon reasonable request to the employer. The employer may take reasonable steps to ensure the identity of a current or former employee. If the employer provides copies of the records, the actual cost of reproduction may be charged to the current or former employee. (c) An employer who receives a written or oral request to inspect or copy records pursuant to subdivision (b) pertaining to a current or former employee shall comply with the request as soon as practicable, but no later than 21 calendar days from the date of the request. A violation of this subdivision is an infraction. Impossibility of performance, not caused by or a result of a violation of law, shall be an affirmative defense for an employer in any action alleging a violation of this subdivision. An employer may designate the person to whom a request under this subdivision will be made. (d) This section does not apply to any employer of any person employed by the owner or occupant of a residential dwelling whose duties are incidental to the ownership, maintenance, or use of the dwelling, including the care and supervision of children, or whose duties are personal and not in the course of the trade, business, profession, or occupation of the owner or occupant. (e) An employee suffering injury as a result of a knowing and intentional failure by an employer to comply with subdivision (a) is entitled to recover the greater of all actual damages or fifty dollars ($50) for the initial pay period in which a violation occurs and one hundred dollars ($100) per employee for each violation in a subsequent pay period, not exceeding an aggregate penalty of four thousand dollars ($4,000), and is entitled to an award of costs and reasonable attorney's fees. (f) A failure by an employer to permit a current or former employee to inspect or copy records within the time set forth in subdivision (c) entitles the current or former employee or the Labor Commissioner to recover a seven-hundred-fifty-dollar ($750) penalty from the employer. (g) An employee may also bring an action for injunctive relief to ensure compliance with this section, and is entitled to an award of costs and reasonable attorney's fees. (h) This section does not apply to the state, to any city, county, city and county, district, or to any other governmental entity, except that if the state or a city, county, city and county, district, or other governmental entity furnishes its employees with a check, draft, or voucher paying the employee's wages, the state or a city, county, city and county, district, or other governmental entity shall, by January 1, 2008, use no more than the last four digits of the employee's social security number or shall use an employee identification number other than the social security number on the itemized statement provided with the check, draft, or voucher. SEC. 4.SEC. 5. Section 240 of the Labor Code is amended to read: 240. (a) If any employer has been convicted of a violation of any provision of this article, or if any judgment against an employer for nonpayment of wages remains unsatisfied for a period of 10 days after the time to appeal therefrom has expired, and no appeal therefrom is then pending, the Labor Commissioner may require the employer to deposit a bond in such sum as the Labor Commissioner may deem sufficient and adequate in the circumstances, to be approved by the Labor Commissioner. The bond shall be payable to the Labor Commissioner and shall be conditioned that the employer shall, for a definite future period, not exceeding two years, pay the employees in accordance with the provisions of this article, and shall be further conditioned upon the payment by the employer of any judgment which may be recovered against the employer pursuant to the provisions of this article. (b) If an order to post a bond issued against an employer under this section remains unsatisfied for a period of 10 days after the time to appeal therefrom has expired, and no appeal from the order is then pending, the Labor Commissioner may require the employer to provide an accounting of assets of the employer, including a list of all bank accounts, accounts receivable, personal property, real property, automobiles or other vehicles, and any other assets, in a form and manner as prescribed by the Labor Commissioner. An employer shall provide an amended accounting of assets, if ordered by the Labor Commissioner to do so. If, within 10 days after a demand for an accounting of assets, made by certified or registered mail, the employer fails to provide an accounting, or if the employer fails to provide an amended accounting after receiving a demand by the Labor Commissioner to do so, the Labor Commissioner may bring an action in the name and on behalf of the people of the State of California against such employer to compel the employer to furnish the accounting. An employer who fails to provide an accounting as required by this subdivision shall be subject to a civil penalty not to exceed ten thousand dollars ($10,000). (c) If, within 10 days after demand for the bond, which demand may be made by mail, the employer fails to deposit the bond, the Labor Commissioner may bring an action in the name and on behalf of the people of the State of California against the employer in a court of competent jurisdiction to compel the employer to furnish the bond or to cease doing business until the employer has done so. The employer has the burden of proving either that the bond is unnecessary or that the amount demanded is excessive. If the court finds that there is just cause for requiring the bond, and that the bond is reasonably necessary or proper to secure prompt payment of the wages of the employees of the employer and the employer's compliance with the provisions of this article, the court may enjoin the employer, whether an individual, partnership, corporation, company, trust, or association, and such other person or persons as may have been or may be concerned with or in any way participating in the failure to pay the wages resulting in the conviction or in the judgment, from doing business until the requirement is met, and make other and further orders appropriate to compel compliance with the requirement. SEC. 5.SEC. 6. Section 243 of the Labor Code is amended to read: 243. (a) If, within 10 years of either a conviction for a violation of this article or failing to satisfy a judgment for nonpayment of wages, or of both, it is alleged that an employer on a second occasion has been convicted of again violating this article or is failing to satisfy a judgment for nonpayment of wages, an employee or the employee's legal representative, an attorney licensed to practice law in this state, may, on behalf of himself or herself and others, bring an action in a court of competent jurisdiction for a temporary restraining order prohibiting the employer from doing business in this state unless the employer deposits with the court a bond to secure compliance by the employer with this article or to satisfy the judgment for nonpayment of wages. (b) Upon the filing of an affidavit that, to the satisfaction of the court, shows reasonable proof that an employer, for the second time within 10 years, has been convicted of violating this article or has failed to satisfy a judgment for the nonpayment of wages, or both, the court may grant an order that prohibits the employer within 30 days from conducting any business within the state unless the employer deposits a bond payable to the Labor Commissioner, with the condition that the employer make wage payments in accordance with this article, or that the employer pay any unsatisfied judgment for nonpayment of wages, or both. The court shall order that the bond be on deposit with the Labor Commissioner at all times within a five-year period from the date of the order, that the employer employs more than 10 employees. The court shall order that the bond be in an amount equal to twenty-five thousand dollars ($25,000) or 25 percent of the weekly gross payroll of the employer at the time of the posting of the bond, whichever is greater, and that the term of the bond be for the duration of the service of the employee who brought the action, until past due wages have been paid, or until satisfaction of all judgments for nonpayment of wages. The bond shall also be payable for wages, interest on wages and for any damages arising from any violation of orders of the Industrial Welfare Commission, and for any other monetary relief awarded to an employee as a result of a violation of this code. To aid in the enforcement of this section, upon a request by the Labor Commissioner or an employee bringing an action pursuant to this section, the court may additionally require the employer to provide an accounting of assets of the employer, including a list of all bank accounts, accounts receivable, personal property, real property, automobiles or other vehicles, and any other assets, in a form and manner as prescribed by the court. An employer shall provide an amended accounting of assets if ordered by the court to do so. If, within 10 days after a demand for an accounting of assets, which demand may be made by certified or registered mail, the employer shall fail to provide an accounting, or if the employer fails to provide an amended accounting being ordered to do so, the court may take all appropriate action to enforce its order, including the imposition of appropriate sanctions. (c) For purposes of subdivision (b), an employer shall be deemed to have been convicted of having violated this article or to have failed to satisfy a judgment for the second time within 10 years if, to secure labor or personal services in connection with his or her business, the employer uses the services of an agent, contractor, or subcontractor who is convicted of a violation of this article or fails to satisfy a judgment for wages respecting those employees, or both, but only if the employer had actual knowledge of the person's failure to pay wages. In issuing a temporary restraining order pursuant to this section, the court, in determining the amount and term of the bond, shall count the agent's, contractor's, or subcontractor's employees as part of the employer's total workforce. This subdivision shall not apply where a temporary restraining order against the agent, contractor, or subcontractor as an employer has been issued pursuant to subdivision (b). (d) An employer who, for the third time within 10 years of the first occurrence, is alleged to have violated this article or to have failed to satisfy a judgment for nonpayment of wages, or both, shall be deemed by the court to have commenced a new five-year period for which the posting of a bond may be ordered in accordance with subdivision (b), except that the court may, in its discretion, require the posting of a bond in a greater amount as it determines appropriate under the circumstances. (e) A former employee who was a party to an earlier action against an employer in which a judgment for the payment of wages was obtained, and who alleges that the employer has failed to satisfy the judgment for the payment of wages, in addition to any other available remedy, may petition the court pursuant to subdivision (b) for a temporary restraining order against the employer to cease doing business in this state unless the employer posts a bond with the court. (f) Actions brought pursuant to this section shall be set for trial at the earliest possible date, and shall take precedence over all other cases, except older matters of the same character and matters to which special precedence may be given by law. (g) Nothing in this section shall be construed to impose any mandatory duties on the Labor Commissioner. SEC. 6.SEC. 7. Section 1174 of the Labor Code is amended to read: 1174. Every person employing labor in this state shall: (a) Furnish to the commission, at its request, reports or information that the commission requires to carry out this chapter. The reports and information shall be verified if required by the commission or any member thereof. (b) Allow any member of the commission or the employees of the Division of Labor Standards Enforcement free access to the place of business or employment of the person to secure any information or make any investigation that they are authorized by this chapter to ascertain or make. The commission may inspect or make excerpts, relating to the employment of employees, from the books, reports, contracts, payrolls, documents, or papers of the person. (c) Keep a record showing the names and addresses of all employees employed and the ages of all minors. (d) Keep, at a central location in the state or at the plants or establishments at which employees are employed, payroll records showing the hours worked daily by and the wages paid to, and the number of piece-rate units earned by and any applicable piece rate paid to, employees employed at the respective plants or establishments. These records shall be kept in accordance with rules established for this purpose by the commission, but in any case shall be kept on file for not less than three years. An employer shall not prohibit an employee from maintaining a personal record of hours worked, or, if paid on a piece-rate basis, piece-rate units earned. SEC. 7.SEC. 8. Section 1194.3 is added to the Labor Code, to read: 1194.3. An employee may recover attorney's fees and costs incurred to enforce a court judgment for unpaid wages due pursuant to this code. SEC. 8.SEC. 9. Section 1197.2 is added to the Labor Code, to read: 1197.2. (a) In addition to any other penalty imposed by law, an employer who willfully violates provisions of this code or orders of the Industrial Welfare Commission requiring payment of the legal minimum wage or the legal overtime compensation applicable to an employee shall be guilty of a misdemeanor. If the total amount of unpaid wages is less than one thousand dollars ($1,000), upon conviction therefor, the employer shall be fined not less than one thousand dollars ($1,000) nor more than ten thousand dollars ($10,000) or imprisoned in the county jail for not more than six months, or both the fine and imprisonment for each offense. If the total amount of unpaid wages is more than one thousand dollars ($1,000),, upon conviction therefor, the employer shall be fined not less than ten thousand dollars ($10,000) nor more than twenty thousand dollars ($20,000), or imprisoned in the county jail for not less than six months, nor more than one year, or both the fine and imprisonment, for each offense. If there are multiple violations of this code or orders of the Industrial Welfare Commission involving more than one employee, the total amount of unpaid wages owed to all employees shall be aggregated together for purposes of determining the level of fine and the term of imprisonment. (b) In addition to any other penalty imposed by law, an employer who willfully fails to pay and has the ability to pay a final court judgment or final order issued by the Labor Commissioner for all wages due to an employee who has been discharged or who has quit within 90 days of the date that the judgment was entered or the order became final is guilty of a misdemeanor. If the total amount of wages due is less than one thousand dollars ($1,000), upon conviction therefor, the employer shall be fined not less than one thousand dollars ($1,000) nor more than ten thousand dollars ($10,000) or imprisoned in the county jail for not more than six months, for each offense. If and, if the total amount of wages due is more than one thousand dollars ($1,000), upon conviction therefor, the employer shall be fined not less than ten thousand dollars ($10,000) nor more than twenty thousand dollars ($20,000), or imprisoned in the county jail for not less than six months, nor more than one year, or both the fine and imprisonment, for each offense. If there are multiple failures to pay wages involving more than one employee, the total amount of wages due to all employees shall be aggregated together for purposes of determining the level of fine and the term of imprisonment. (c) As used in this section, "willfully" has the same meaning as provided in Section 7 of the Penal Code. (d) An employer or other person guilty of a misdemeanor under subdivision (a) or (b) shall pay, in addition to any criminal fines, restitution to the aggrieved employee or employees in an amount equal to the total amount of unpaid wages. (e) Nothing in this section precludes prosecution under any other provision of law. SEC. 9.SEC. 10. Section 1206 is added to the Labor Code, to read: 1206. Notwithstanding any other provision of law, this code establishes minimum penalties for failure to comply with wage-related statutes and regulations. SEC. 10.SEC. 11. Section 2811 is added to the Labor Code, to read: 2811. (a) (1) At the time of hiring, an employer shall provide each employee, in writing in English and in the language identified by the employee as his or her primary language, a notice containing the following information: (A) The rate or rates of pay and basis thereof, whether paid by the hour, shift, day, week, salary, piece, commission, or otherwise including any rates for overtime, as applicable. (B) Allowances, if any, claimed as part of the minimum wage, including meal or lodging allowances. (C) The regular payday designated by the employer in accordance with the requirements of this code. (D) The name of the employer, including any "doing business as" names used by the employer. (E) The physical address of the employer's main office or principal place of business, and a mailing address, if different. (F) The telephone number of the employer. (G) Any other information the Labor Commissioner deems material and necessary. (2) The Labor Commissioner shall prepare templates that comply with the requirements of paragraph (1). Each template shall be in English and one additional language. The Labor Commissioner shall determine, in his or her discretion, which languages to provide in addition to English, based on the size of the state population that speaks each language and any other factor that the Labor Commissioner shall deem relevant. All templates shall be made available to employers in such manner as determined by the Labor Commissioner. (3) When an employee identifies as his or her primary language a language for which a template is not available from the Labor Commissioner, the employer may comply with this subdivision by providing the employee an English-language notice or acknowledgment. (4) An employer shall not be penalized for errors or omissions in the non-English portions of any notice provided by the Labor Commissioner. (b) An employer shall notify his or her employees in writing of any changes to the information set forth in the notice, or in the terms or conditions of employment, within seven calendar days after the time of the changes, unless all changes are reflected on the wage statement furnished in accordance with Section 226. (c) For purposes of this section, "employee" does not include any of the following: (1) An employee directly employed by the state or any political subdivision thereof, including any city, county, city and county, or special district. (2) An employee who is exempt from the payment of overtime wages by statute or the wage orders of the Industrial Welfare Commission. (3) An employee who is covered by a valid collective bargaining agreement if the agreement expressly provides for the wages, hours of work, and working conditions of the employee, and if the agreement provides premium wage rates for all overtime hours worked and a regular hourly rate of pay for those employees of not less than 30 percent more than the state minimum wage. SEC. 11.SEC. 12. No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.