BILL ANALYSIS Ó AB 442 Page 1 Date of Hearing: April 10, 2013 ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT Roger Hernández, Chair AB 442 (Nazarian) - As Introduced: February 19, 2013 SUBJECT : Employees: wages. SUMMARY : Provides that a citation issued by the Labor Commissioner (LC) for failure to pay minimum wage shall include liquidated damages, as already available under existing law in civil actions or administrative wage claim actions. EXISTING LAW : 1)Provides that an employee who receives less than the minimum wage is entitled to recover in a civil action, the unpaid balance of the full amount of the minimum wage, liquidated damages in an amount equal to the wages unlawfully unpaid and interest thereon, reasonable attorney's fees and costs of suit. 2)Provides that in a wage claim brought before the LC for failure to pay minimum wage, an employee shall be entitled to recover liquidated damages in an amount equal to the wages unpaid and interest thereon. 3)Provides that if the employer demonstrates to the satisfaction of the court or the LC that the failure to pay 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 the law, the court or the LC may, as a matter of discretion, refuse to award liquidated damages or reduce the amount of liquidated damages. 4)Provides that, in a citation for a minimum wage violation issued by the LC, an employer shall be subject to a specified civil penalty and restitution of wages. FISCAL EFFECT : Unknown COMMENTS : This bill is sponsored by the California Rural Legal Assistance Foundation (CRLAF) who argues that it will provide that when the Labor Commissioner, after an inspection or investigation, issues a citation against an employer for failure AB 442 Page 2 to pay minimum wages to his/her employees, the LC is also able to recover for those employees the unpaid minimum wage "liquidated damages" available elsewhere under state law. Under Labor Code section 1194, an employee who receives less than the minimum wage is entitled to recover in a civil action, the unpaid balance of the full amount of the minimum wage, liquidated damages in an amount equal to the wages unlawfully unpaid and interest thereon, reasonable attorney's fees and costs of suit. AB 240 (Bonilla) of 2011 amended Labor Code sections 1194.2 and 98 to authorize the Labor Commissioner to award unpaid minimum wage liquidated damages in administrative wage claim hearings under the same conditions that existed for allowing a court to award those same damages to workers. CRLAF contends that this bill fills the one remaining gap in the LC's authority to make workers whole in minimum wage violation cases. This bill provides that the LC may also subject the minimum wage violator to payment of "liquidated damages" to the employee. CRLAF argues that this change to the law ensures that regardless of where wage theft is found, employees cheated out of wages will get what the law intends: restitution of the amount of unpaid minimum wages AND an amount equal to the total amount of unpaid minimum wages (as "liquidated damages"). CRLAF contends that the failure to enact this bill will create new costs to the Division of Labor Standards Enforcement (DLSE) and cause delays for workers entitled to liquidated damages. Specifically, they argue that because the award of liquidated damages is mandatory when minimum wages have not been paid, the failure to recover those damages for the worker after a citation is issued will likely result in the worker bringing a separate claim before the LC. This adds unnecessary new costs to DLSE and also adds delays for workers who have been cheated of wages and deserve full compensation. REGISTERED SUPPORT / OPPOSITION : Support California Rural Legal Assistance Foundation (sponsor) Opposition AB 442 Page 3 None on file. Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091