BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 469|
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THIRD READING
Bill No: AB 469
Author: Swanson (D), et al.
Amended: 8/15/11 in Senate
Vote: 21
SENATE LABOR & INDUSTRIAL RELATIONS COMM. : 5-1, 6/22/11
AYES: Lieu, DeSaulnier, Leno, Padilla, Yee
NOES: Wyland
NO VOTE RECORDED: Runner
SENATE JUDICIARY COMMITTEE : 3-2, 7/5/11
AYES: Evans, Corbett, Leno
NOES: Harman, Blakeslee
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 50-25, 6/1/11 - See last page for vote
SUBJECT : Employees: wages
SOURCE : California Labor Federation
California Rural Legal Assistance Foundation
Young Workers United
DIGEST : This bill (1) makes 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 of the Labor commission for wages due; (2)
extends the period within which the division may commence a
collection action, s defined, from one year to three years,
CONTINUED
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(3) extends the time required for a subsequently convicted
employer to maintain a bond from six months to two years
and requires that a subsequently convicted employer provide
an accounting of assets, as specified, to the Labor
Commissioner; (4) requires 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 and to
notify each employee in writing of any changes to the
information set forth in the notice within seven calendar
days of the changes unless such changes are reflected on a
timely wage statement or another writing, as specified. No
notice is 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; (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; (6) states that the Labor Code establishes
minimum penalties for failure to comply with wage-related
statutes and regulations.
ANALYSIS :
Existing law:
1.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 makes 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 of the
Labor Commissioner for wages due.
2. 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
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the penalty or fee became final.
This bill extends the period within which the division
may commence a collection action, as defined, from one
year to three years.
3. 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
six months to two years and requires that a subsequently
convicted employer provide an accounting of assets, as
specified, to the Labor Commissioner.
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 requires 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 and to notify each
employee in writing of any changes to the information
set forth in the notice within seven calendar days of
the changes unless such changes are reflected on a
timely wage statement or another writing, as specified.
No notice is 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.
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 states that the Labor code establishes minimum
penalties for failure to comply with wage-related statutes
and regulations.
Comments
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This bill, also known as the Wage Theft Prevention Act of
2011, proposes a number of changes aimed at preventing or
combating the intentional theft of earned wages by
unscrupulous employers. The bill draws on several
anti-wage theft initiatives recently enacted in other
states such as New York, Illinois, Wisconsin and
Washington.
This bill also seeks to put into effect several policy
suggestions that were put forward by two recent studies on
wage left.
Studies on Wage Theft . In 2008, the Ford Foundation
sponsored a survey of 4,387 workers in low-wage industries
in the three largest U.S. cities: Chicago, Los Angeles and
New York City. The report of that survey, titled Broken
Laws, Unprotected Workers: Violations of Employment and
Labor Laws in America's Cities, revealed that 26 percent of
workers in the sample were paid less than the legally
required minimum wage the prior work week, and 60 percent
of these workers were underpaid by more than $1 per hour.
In addition, 76 percent of the respondents who worked
overtime in the previous week were not paid the legally
required overtime rate by their employers.
The study also notes that minimum wage violation rates vary
significantly by industry, and occupation. For example,
some industries, such as apparel and textile manufacturing
and personal and repair services have minimum wage
violation rates that exceed 40 percent, while others,
including restaurants, and retail and grocery stores, have
rates of 20 to 25 percent. However, the study found that
undocumented immigrant women were at the greatest risk of
minimum wage violations. The study estimated that the
workers in low-wage industries Chicago, Los Angeles, and
New York City lose more than $56.4 million per week due to
labor law violations.
A follow-up study by the UCLA Institute for Research and
Labor and Employment was published earlier this year, and
that study utilized the data from the 2008 survey, but
focused specifically on Los Angeles County. This study,
titled Wage Theft and Workplace Violations in Los Angeles:
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The Failure of Employment and Labor Law for Low-Wage
Workers focused on a survey results of 1,815 workers in Los
Angeles County.
This study found similar results to the national survey:
almost 30 percent of the workers sampled were paid less
than the minimum wage in the prior work week, and 63.3
percent of these workers were underpaid by more than $1 per
hour. Assuming a full-year work schedule, Los Angeles
County survey respondents lost an average of $2,070.00
annually out of total earnings of $16,536.00. The study
estimated that workers in low-wage industries in Los
Angeles County lose more than $26.2 million per week as a
result of employment and labor law violations.
Both of the studies make the same public policy
recommendations to address these issues, which included
strengthening government enforcement of existing employment
and labor laws and stiffening the penalties.
Prior Legislation
AB 2187 (Arambula) of 2010 would have increased criminal
penalties for an employer's willful failure to pay wages.
The bill was vetoed by Governor Schwarzenegger, who stated
in his veto message that he felt that existing law is
sufficient.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/15/11)
California Labor Federation (co-source)
California Rural Legal Assistance Foundation (co-source)
Young Workers United (co-source)
Alameda Labor Council, AFL-CIO
California Conference Board of the Amalgamated Transit
Union
California Conference of Machinists
California Employment Lawyers Association
California Nurses Association
California Teamsters Public Affairs Council
Centro Legal de la Raza
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Coalition for Humane Immigrant Rights of Los Angeles
Engineers and Scientists of California
International Longshore & Warehouse Union
National Association of Working Women
National Lawyers Guild Labor & Employment Committee
Professional & Technical Engineers, Local 21
UNITE HERE!
United Food and Commercial Workers Union, Western States
Council
OPPOSITION : (Verified 8/15/11)
Acclimation Insurance Management Services
Allied Managed Care
Associated General Contractors
Association Builders and Contractors of California
California Association for Health Services at Home
California Chapter of the American Fence Association
California Employment Law Council (unless amended)
California Farm Bureau Federation
California Fence Contractors' Association
California Independent Grocers Association
California Manufacturers & Technology Association
California Retailers Association
Construction Employers Association
Engineering Contractors' Association
Flasher Barricade Association
Marin Builders' Association
Western Growers Association
ARGUMENTS IN SUPPORT : This bill is co-sponsored by the
California Labor Federation, AFL-CIO and the California
Rural Legal Assistance Foundation.
They contend that this measure is a response to widespread
wage theft in California, and draws on anti-wage theft
initiatives recently enacted in other states (such as New
York, Illinois, Wisconsin and Washington). This bill
adapts a number of these states' new laws to fit
California's unique employment landscape, and proposes
common sense solutions to some significant weaknesses in
current state law.
The sponsors also argue that this bill is needed because
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enforcement of California labor laws related to wage
violations is weak and largely ineffective. In 2009, only
216 employers in the entire state of California were cited
by the Division of Labor Standards Enforcement violating
minimum wage and overtime laws. DLSE assessed $650,550 in
penalties for these violations but collected only $230,154.
During that same year, DLSE found $22,381,286 in wages
due, but recovered only $13,062,164. When these results
are put in the context of the billions of dollars stolen in
the underground economy, it is clear they are too feeble to
constitute a meaningful deterrent.
Finally, the sponsors note that other states and local
jurisdictions facing widespread non-compliance with wage
laws have also acted to strengthen both criminal and civil
laws. Specifically, they indicate that among the states
that have addressed wage theft in 2009-2010 are: New
Mexico, where the state legislature passed a bill granting
treble damages to victims of wage violations; New York,
where the legislature passed a disclosure law aimed at
prevention of wage theft; Maryland, where the Governor
established a task force on workplace fraud; and Illinois,
which increased criminal penalties for wage violations.
ARGUMENTS IN OPPOSITION : Opponents argue that this bill
criminalizes any employer who "willfully fails" to pay
wages due within 90 days of a voluntary or involuntary
termination of employment. They contend that the term
"willfully" as defined as "may expose employers who may
make an honest mistake in calculating overtime rates or
wages due to criminally prosecutions under this bill
despite the fact that such employers had no ill-intent to
harm the employee.
Moreover, opponents contend that this bill also seeks to
criminalize officers, agents or employees of the employer
for their "willful failure" to pay wages due to another
employee. The California Supreme Court has stated on
numerous occasions, that an officer or other employee of an
employer cannot be held liable for unpaid wages.
Therefore, opponents argue that this bill would undermine
such holdings and subject individual employees who were
merely following the directions of the employer to
liability under this bill.
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Opponents also question the necessity of this bill, since
existing law requires the employer to make the employee
whole and imposes stiff penalties of varying amounts,
depending on the wage dispute at issue, when the employer
fails to pay wages due. Additionally, current criminal laws
outlaw theft, which permits prosecution of ill-intentioned
employers who steal money from their employees.
ASSEMBLY FLOOR : 50-25, 6/1/11
AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block,
Blumenfield, Bonilla, Bradford, Brownley, Buchanan,
Butler, Charles Calderon, Campos, Carter, Cedillo,
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, Portantino,
Skinner, Solorio, Swanson, Torres, Wieckowski, Williams,
Yamada, John A. Pérez
NOES: Achadjian, Bill Berryhill, Conway, Cook, Donnelly,
Fletcher, Beth Gaines, Grove, Hagman, Halderman, Harkey,
Jones, Knight, Logue, Mansoor, Miller, Morrell, Nestande,
Nielsen, Norby, Olsen, Silva, Smyth, Valadao, Wagner
NO VOTE RECORDED: Furutani, Garrick, Gorell, Jeffries, V.
Manuel Pérez
PQ:do 8/17/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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