BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Noreen Evans, Chair
2013-2014 Regular Session
AB 442 (Nazarian)
As Introduced
Hearing Date: June 25, 2013
Fiscal: Yes
Urgency: No
TMW
SUBJECT
Employees: Wages
DESCRIPTION
This bill would authorize the Labor Commissioner to collect
liquidated damages from an employer who pays an employee less
than minimum wage.
BACKGROUND
Existing law authorizes an employee, who is paid less than the
minimum wage, to recover liquidated damages in an amount equal
to the wages unlawfully withheld by an employer. Liquidated
damages are monetary compensation awarded for a loss, detriment,
or injury to the employee resulting from the employer's failure
to pay the minimum wage. The employee may recover liquidated
damages in an administrative action before the Labor
Commissioner or in a civil action.
Existing law authorizes the Labor Commissioner to collect from
an employer, who pays an employee less than minimum wage, a
civil penalty and restitution of wages payable to the employee.
This bill, sponsored by the California Rural Legal Assistance
Foundation, would also authorize the Labor Commissioner to
collect liquidated damages from the employer to be paid to the
employee.
This bill was heard by the Senate Labor and Industrial Relations
Committee on June 12, 2013, and passed out on a vote of 4-0.
CHANGES TO EXISTING LAW
(more)
AB 442 (Nazarian)
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Existing law authorizes the Labor Commissioner to adopt
regulations setting a minimum wage for all employees in
California. (Lab. Code Sec. 1182.)
Existing law provides that the minimum wage to be paid to
employees, with limited exceptions, is not less than $8.00 per
hour. (Lab. Code Sec. 1182.12.)
Existing law authorizes the Labor Commissioner to investigate
employee complaints and allows the Labor Commissioner to hold a
hearing in any action to recover wages, penalties, and other
demands for compensation, including liquidated damages if the
complaint alleges payment of a wage less than the minimum wage.
(Lab. Code Sec. 98.)
Existing law authorizes an employee receiving less than the
legal minimum wage or legal overtime compensation to recover in
a civil action the unpaid balance of the full amount of the
minimum wage or overtime compensation, including interest,
reasonable attorney's fees and costs, and liquidated damages.
(Lab. Code Secs. 1194, 1194.2.)
Existing law states that if the employer demonstrates to the
satisfaction of the court or the Labor Commissioner 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 Labor
Commissioner may, as a matter of discretion, refuse to award
liquidated damages or reduce the amount of liquidated damages.
(Lab. Code Sec. 1194.2.)
Existing law provides that an employer, who pays an employee a
wage less than the minimum wage, is subject to a civil penalty
and restitution of wages payable to the employee. (Lab. Code
Sec. 1197.1(a).)
Existing law authorizes the Labor Commissioner to issue a
citation to an employer, who has failed to pay an employee
minimum wages and allows the Labor Commissioner to enforce the
citation and recover the civil penalty and wages payable to the
employee pursuant to the citation. (Lab. Code Sec. 1197.1(b).)
Existing law provides the employer with an administrative
process through which the employer may contest the citation or
proposed assessment of a civil penalty and wages. (Lab. Code
AB 442 (Nazarian)
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Sec. 1197.1(c).)
This bill would also authorize the Labor Commissioner to issue a
citation for the recovery of liquidated damages associated with
the unpaid minimum wages, payable to the employee.
This bill would also make other conforming revisions.
COMMENT
1. Stated need for the bill
The author writes:
There is substantial evidence of widespread minimum wage
violations in California. A UCLA 2010 report, titled "Wage
Theft and Workplace Violations in Los Angeles," found that
29.7 [percent] of workers were paid below the state minimum
wage. In 2009, the Ford Foundation's "Broken Laws,
Unprotected Workers " found that depending on the industry or
occupation, between 40 [percent] and 66 [percent] of workers
were not paid the minimum wage.
AB 442 expands the Labor Commissioner's authority, after a
citation from a field investigation is issued to an employer
for failure to pay minimum wages to his/her workers, to also
recover and pay to the workers, the unpaid minimum wage
liquidated damages.
2. Existence of wage theft problem
As noted by the author, wage theft is on the rise and California
workers are not being paid money earned. Wage theft is a term
used to describe labor law violations such as not paying an
employee minimum wages or overtime, not paying for off-the-clock
work, tip stealing, and not paying final wages.
Several high profile wage theft cases have been reported in
recent years. In February 2009, the Los Angeles city attorney
filed criminal charges against two car wash owners for failing
to pay 250 workers the minimum wage and for denying them legally
required meal and rest breaks. The filing alleged that, in
violation of minimum wage laws, workers were paid a flat rate of
$35.00 to $40.00 a day for shifts of more than eight hours, that
their lunch breaks were as little as fifteen minutes a day, that
they received no pay for overtime work, and that no medical care
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was provided for lacerations and acid burns caused by the
machinery and chemicals they used on the job. The owners were
charged with failing to pay a total of $450,000.00 in back wages
over five years. (Cathcart, Carwashes Accused of Labor
Violations (Feb. 11, 2009) New York Times
[as of
June 17, 2013].)
A similar lawsuit against a builder employing residential
construction workers in California, Nevada, and Arizona alleged
that the company failed to pay employees for hours they worked,
did not pay legally required overtime or provide breaks, and
kept workers off the clock while they traveled between job sites
and awaited materials. The suit was settled in October 2009,
providing over $242,000.00 in unpaid wages to 85 workers.
(McDonnell, Builder to Settle with 85 Workers in Overtime Case
(Oct. 13, 2009) Los Angeles Times <
http://articles.latimes.com/2009/oct/13/local/me-construction13>
[as of June 14, 2013].)
The problem is not limited to small businesses like car washes
or garment subcontractors. In 2008, Wal-Mart announced a
settlement of sixty-three cases in forty-two states, which
involved charges that the company had forced employees to work
off the clock without pay after their official shifts ended. The
settlement totaled $352 million in unpaid wages and involved
hundreds of thousands of current and former Wal-Mart hourly
employees across the country. In California, a jury ordered
Wal-Mart to pay $172 million for making employees miss meal
breaks. (Associated Press, Wal-Mart Settles Workers' Suit for
$54.25M (Feb. 11, 2009) CBS News [as of June 14, 2013].)
According to a 2010 University of California Los Angeles (UCLA)
study, 29.7 percent of the more than 1,800 workers surveyed
received less than the minimum wage, and 79.2 percent were not
paid the legally required overtime rate. (Milkman, González,
Narro, Wage Theft and Workplace Violations in Los Angeles, The
Failure of Employment and Labor Law for Low-Wage Workers (2010)
Institute for Research on Labor and Employment, University of
California, Los Angeles <
http://labor.ucla.edu/publications/reports/ LAwagetheft.pdf> [as
of June 14, 2013], p. 30.) Front-line workers in low-wage
industries lose more than $26.2 million per week as a result of
employment and labor law violations. The study noted the
societal ills of wage theft in that "[w]age theft not only
depresses the already meager earnings of low-wage workers, it
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also adversely impacts their communities and the local economies
of which they are a part. Low-income families spend the bulk of
their earnings on basic necessities like food, clothing, and
housing. Their expenditures circulate through local economies,
supporting businesses and jobs. Wage theft robs local
communities of this spending and ultimately limits economic
growth." (Id. at p. 58.)
Recent legislation has been enacted to combat wage theft. AB
469 (Swanson, Ch. 655, Stats. 2011) established the Wage Theft
Prevention Act of 2011, which provides several anti-wage theft
initiatives including extending the period within which the
division may commence a collection action from one year to three
years and, in addition to being subject to a civil penalty,
makes it a misdemeanor if an employer willfully violates
specified wage statutes or orders, among other provisions.
Additionally, AB 240 (Bonilla, Ch. 272, Stats. 2012) authorized
the Labor Commissioner to award unpaid minimum wage liquidated
damages in administrative wage claim hearings under the same
conditions that exist for allowing a court to award those same
damages to workers. This bill seeks to further combat wage
theft by authorizing the Labor Commissioner to collect
liquidated damages pursuant to a citation on behalf of the
employee.
3. Authorizing collection of liquidated damages by Labor
Commissioner
This bill would authorize the Labor Commissioner to collect
liquidated damages from an employer who pays an employee less
than minimum wage. In this way, this bill would extend the
existing ability of the Labor Commissioner to collect civil
penalties and unpaid wages, payable to the employee, pursuant to
a citation issued by the Labor Commissioner to the employer.
The author argues that "[t]his bill ensures the administrative
process provides a legal remedy for low-wage workers whose
claims may not be sufficient to attract an attorney, which
leaves the workers with no alternative other than an
administrative hearing." The California Rural Legal Assistance
Foundation (CRLAF), sponsor, argues that this bill "simply
provides that in any investigation or inspection by the Division
of Labor Standards Enforcement [(DLSE)] leading to issuance of a
citation for a minimum wage violation, DLSE would also seek
recovery of liquidated damages for victimized workers in an
amount equal to the total amount of their unpaid minimum wages.
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As you know, these damages are mandatory if a worker succeeds in
a minimum wage lawsuit or in a Berman hearing under Section 98."
Additionally, the author argues that this bill would save the
DLSE money and prevent delays for workers who are entitled to
minimum wage liquidated damages. CRLAF notes that "[b]ecause an
award of liquidated damages is otherwise mandatory when there is
a minimum wage violation, if DLSE is not given authorization to
recover liquidated damages when it cites for a minimum wage
violation, workers simply file a claim under the Berman hearing
process to recover those damages. These hearings will add
completely unnecessary costs to DLSE, will mean unnecessary
delays in workers being made whole after minimum wage
violations, and will impose additional burdens on employers
which would be avoided if the damages are recovered at the time
of the issuance of the minimum wage citation."
In addition to existing civil penalties and recovery of wages,
this bill would authorize the Labor Commissioner to recover
liquidated damages on behalf of the employee. Notably, the
existing citation provisions provide the employer with
procedures to challenge a citation issued for civil penalties
and wages. By adding the ability to recover liquidated damages
to the citation provision, this bill would ensure that an
employer may challenge the collection of liquidated damages by
the Labor Commissioner. Furthermore, by adding the collection
of liquidated damages to the citation provision, this bill would
aid workers, who may otherwise be unable to collect liquidated
damages, to recover compensation for damages to which they are
entitled under existing law.
Support : American Federation of State, County, and Municipal
Employees, AFL-CIO; California Federation of Teachers;
California Labor Federation
Opposition : None Known
HISTORY
Source : California Rural Legal Assistance Foundation
Related Pending Legislation : None Known
Prior Legislation :
AB 442 (Nazarian)
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AB 240 (Bonilla, Ch. 272, Stats. 2012) See Comment 2.
AB 469 (Swanson, Ch. 655, Stats. 2011) See Comment 2.
Prior Vote :
Assembly Committee on Labor and Employment (Ayes 7, Noes 0)
Assembly Committee on Judiciary (Ayes 10, Noes 0)
Assembly Committee on Appropriations (Ayes 17, Noes 0)
Assembly Floor (Ayes 75, Noes 0)
Senate Committee on Labor and Industrial Relations (Ayes 4, Noes
0)
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