BILL ANALYSIS Ó AB 442 Page 1 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 Page 2 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 Page 3 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 AB 442 Page 4 Analysis Prepared by : Kevin G. Baker and Kelsey Fischer/ JUD. / (916) 319-2334