BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 442
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          Date of Hearing:  April 16, 2013

                           ASSEMBLY COMMITTEE ON JUDICIARY
                                Bob Wieckowski, Chair
                 AB 442 (Nazarian) - As Introduced: February 19, 2013
                                           
                                   PROPOSED CONSENT
                                           
          SUBJECT  :  UNPAID WAGES: LIQUIDATED DAMAGES

           KEY ISSUE  :  SHOULD THE EMPLOYEES OF THOSE FOUND TO BE IN  
          VIOLATION OF MINIMUM WAGE LAWS BY THE LABOR COMMISSIONER BE  
          ENTITLED TO THE SAME DAMAGES ALREADY AVAILABLE THROUGH CIVIL OR  
          ADMINISTRATIVE WAGE CLAIM ACTIONS?

           FISCAL EFFECT  :  As currently in print this bill is keyed fiscal.

                                      SYNOPSIS
          
          This bill seeks to extend the recovery of liquidated damages to  
          the affected employees of employers found by the Labor  
          Commissioner to have violated minimum wage laws.  Liquidated  
          damages are already available to employees who have not been  
          paid minimum wage through civil actions and administrative wage  
          hearings before the Labor Commissioner.  This bill would extend  
          the authority of the Labor Commissioner to award the payment of  
          liquidated damages to affected employees through the Labor  
          Commissioner citation process, in which the employer not paying  
          minimum wages is subject to a civil penalty and payment of  
          unpaid wages. Supporters argue that this bill fills the one  
          remaining gap in the Labor Commissioner's authority to cite and  
          recover from employers violating minimum wage laws.  There is no  
          known opposition. 

           SUMMARY  :  Extends the award of liquidated damages to those  
          employees whose employer has been cited by the Labor  
          Commissioner in violation of minimum wage laws.  Specifically,  
           this bill  adds "liquidated damages" paid to the employee to the  
          list of things that a person who the Labor Commissioner has  
          determined to have paid or caused to be paid a wage less than  
          the minimum wage is subject to.

           EXISTING LAW  :  
           
          1)Provides than an employee who is paid less than the minimum  








                                                                  AB 442
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            wage may recover unpaid wages through a civil action or  
            administrative hearing.  (Labor Code sections 98, 1193.6 and  
            1194.)

          2)In a civil or administrative action to recover wages because  
            of the payment of a wage less than minimum wage, an employee  
            shall be entitled to recover liquidated damages in an amount  
            equal to the wages unlawfully unpaid and interest thereon.   
            (Labor Code section 1194.2.)

          3)Upon inspection or investigation, the Labor Commissioner may  
            issue a citation to a person who is found to have paid or  
            caused to be paid a wage less than the minimum.  The cited  
            violator is subject to a civil penalty and restitution of  
            wages payable to the employee.  (Labor Code section 1197.1(a)  
            and (b).)

           COMMENTS  :  Under current law, if an employer is found to have  
          paid an employee less than the minimum wage through a civil  
          action or an administrative hearing before the Labor  
          Commissioner, the employee is entitled to recover the unpaid  
          balance of the full amount of the minimum wage and liquidated  
          damages in an amount equal to the wages unpaid and interest  
          thereon.  This bill extends the entitlement to liquidated  
          damages to those employees whose employer has been found by the  
          Labor Commissioner, upon inspection or investigation, to have  
          paid an employee less than the minimum wage. 

           Amendments to the Labor Code in 2011 allowed for the Recovery of  
          Liquidated Damages in both Civil Actions and Administrative  
          Hearings.   Labor Code sections 1193.6 and 1194 provide that an  
          employee receiving less than the legal minimum wage is entitled  
          to recover in a civil action the unpaid balance of the full  
          amount of the minimum wage, including the interest.  Prior to AB  
          240 (Bonilla) of 2011, Labor Code section 1194.2 only allowed  
          the recovery of liquidated damages via this civil action code  
          section.  AB 240 amended Labor Code section 98 and 1194.2 to  
          authorize the Labor Commissioner to award unpaid minimum wage  
          liquidated damages in administrative wage claim hearings,  
          creating parity of entitlements from the two wage proceedings. 

           Employers Who Are Found in Violation of Minimum Wage Laws by the  
          Labor Commissioner's Citation Process Are Not Currently Subject  
          to Payment of Liquidated Damages to Affected Employees.   After  
          inspection or investigation, if the Labor Commissioner  








                                                                  AB 442
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          determines that an employer is paying less than minimum wage the  
          Labor Commissioner may issue a citation to the person in  
          violation.  Currently, under section 1197.1, an employer shall  
          be subject to a civil penalty and restitution of wages to the  
          employee.  AB 442 adds "liquidated damages" to section 1197.1,  
          closing the gap of damages wronged employees are entitled to  
          between civil actions, administrative hearings, and Labor  
          Commissioner citations.  The author states, this bill "ensures  
          that workers have the same monetary relief whether they pursue  
          their claims administratively, by way of the courts, or via the  
          Labor Commissioner's existing authority."

           This Bill Does Not Expand The Class Of Employers Who Are Subject  
          To Pay Affected Employees Liquidated Damages.   This bill uses  
          the Labor Commissioner's existing authority to investigate and  
          cite employers paying less than the minimum wage, along with the  
          Labor Commissioner's power to recover the penalties assessed and  
          wages owed to the employee, to provide equal recovery no matter  
          through which process a violation is found.  The author contends  
          that this is a more efficient way of awarding damages to  
          affected employees.  Specifically, because the award of  
          liquidated damages is mandatory when minimum wages have not been  
          paid, an employee who was awarded unpaid wages after the Labor  
          Commissioner's citation would then commence a civil action or  
          administrative hearing for liquidated damages. 

          Further, procedures are in place to protect employers from  
          unjust findings of liquidated damages. For example, Section  
          1197.1 provides a procedure for an alleged minimum wage violator  
          to contest the Labor Commissioner's citation, civil penalty, and  
          wage findings, including filing a writ of mandate.   
          Additionally, this bill subjects the Labor Commissioner's  
          findings of liquidated damages to section 1194.2, which gives  
          the court or the Labor Commissioner discretion to refuse to  
          award liquidated damages.  
           
           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          California Rural Legal Assistance Foundation (sponsor)

           Opposition 
           
          None on file








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          Analysis Prepared by  :  Kevin G. Baker and Kelsey Fischer/ JUD. /  
          (916) 319-2334