BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1723
                                                                  Page  1

          Date of Hearing:   April 2, 2014

                     ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
                               Roger Hernández, Chair
                AB 1723 (Nazarian) - As Introduced:  February 14, 2014
          
          SUBJECT  :   Employees: wages.

           SUMMARY  :   Provides that minimum wage citations issued by the  
          Labor Commissioner will also include any applicable "waiting  
          time" penalties provided for under existing law, as specified.   
          Specifically,  this bill  :  

          1)Provides that, in a citation by the Labor Commissioner for  
            failure to pay minimum wage, an employer who fails to pay the  
            minimum wage shall be subject to any applicable "waiting time"  
            penalties under existing law in addition to existing civil  
            penalties, restitution of wages, and liquidated damages.

          2)Makes related conforming changes to existing law.

           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. 

          2)Provides for criminal and civil penalties for violations of  
            statutes and orders of the commission regarding payment of  
            wages. 

          3)Authorizes the Labor Commissioner to recover liquidated  
            damages for an employee who brings a complaint alleging  
            payment of less than the minimum wage fixed by an order of the  
            commission or by statute.

          4)Subjects any employer, who pays or causes to be paid to any  
            employee a wage less than the minimum fixed by an order of the  
            commission to a citation that includes a civil penalty, the  
            payment of restitution of wages, and payment of liquidated  
            damages to the employee.

          5)Provides that if an employer willfully fails to pay any wages  
            of an employee who is discharged or who quits, the wages of  








                                                                  AB 1723
                                                                  Page  2

            the employee shall continue as a penalty from the due date  
            thereof at the same rate until paid or until an action  
            therefor is commenced; but the wages shall not continue for  
            more than 30 days.

           FISCAL EFFECT  :   Unknown







           COMMENTS  :   Under existing law, there are generally three main  
          avenues available under the Labor Code for the recovery of  
          unpaid minimum wages.

          First, an employee may file an administrative wage claim with  
          the Labor Commissioner.  (Labor Code Section 98).  Existing law  
          provides for an administrative hearing process for the  
          adjudication of such claims, including wages, penalties, and  
          other demands for compensation, including liquidated damages.   
          (Labor Code Section 98).  These administrative hearings are  
          usually referred to as "Berman hearings."

          Second, an employee may file a civil action to recover the full  
          amount of the minimum wage, including interest, reasonable  
          attorney's fees and costs of suit.  (Labor Code Section 1194).   
          In such a civil action, an employee shall also be entitled to  
          liquidated damages in an amount equal to the wages unlawfully  
          paid.  (Labor Code Section 1194.2).

          Third, existing law authorizes the Labor Commissioner to issue a  
          citation for failure to pay the state minimum wage after an  
          inspection or investigation.  (Labor Code Section 1197.1).   
          Existing law provides that the employer shall be subject to a  
          civil penalty, restitution of wages, and liquidated damages  
          payable to the employee.  Existing law also provides for an  
          administrative hearing process for a person to contest a  
          citation or proposed assessment of civil penalties, wages and  
          liquidated damages.  (Labor Code Section 1197.1).  

          Under a different provision of existing law, when an employer  
          willfully fails to pay any wages of an employee who is  
          discharged or who quits, the wages of the employee continue as a  








                                                                  AB 1723
                                                                  Page  3

          penalty for up to 30 days.  (Labor Code Section 203).  These  
          wages are often referred to as "waiting time" penalties and are  
          generally designed to ensure the prompt payment of earned wages.  
           Actions to recover unpaid minimum wages often include claims  
          for "waiting time" penalties under Labor Code Section 203.

          Under existing law, the Labor Commissioner lacks the statutory  
          authority to recover "waiting time" penalties as part of a  
          citation for a minimum wage violation.

           ARGUMENTS IN SUPPORT  :

          This bill is sponsored by the California Rural Legal Assistance  
          Foundation, who argues that it will ensure that victims of wage  
          theft will recover any applicable "waiting time" penalties when  
          the Labor Commissioner issues a citation for a minimum wage  
          violation.

          The sponsor states the following:

               "Without the legal authority to recover these monetary  
               penalties for workers as part of a [Labor Commissioner]  
               minimum wage citation, state policy to ensure prompt  
               payment of wages is significantly undercut, and workers are  
               denied all that is due to them following a theft of their  
               wages. In addition, because payment of 'waiting time'  
               penalties, where applicable, is mandatory, if the [Labor  
               Commissioner] does not recover them when it cites for a  
               minimum wage violation, workers will simply file a  
               subsequent 'Berman hearing' administrative claim to recover  
               them. These hearings will create unnecessary and completely  
               avoidable costs for [the Labor Commissioner], and will also  
               result in possibly lengthy delays for workers seeking to be  
               made whole after theft of their wages."    

           ARGUMENTS IN OPPOSITION  :

          The California Association for Health Services at Home (CAHSAH)  
          expresses concerns about whether, under this bill, an employer  
          would have the same opportunity to present defenses against  
          "waiting time" penalties as they would under the normal "Berman  
          hearing" process.  They state that the potential of penalties  
          elevates the need for a fair hearing to ensure employers have  
          equal protections under the law and the ability to present  
          information.








                                                                  AB 1723
                                                                  Page  4

           
          REGISTERED SUPPORT / OPPOSITION :   

           Support 
           
          California Rural Legal Assistance Foundation (sponsor)
          Worksafe

           Opposition 
           
          California Association for Health Services at Home

           
          Analysis Prepared by  :    Ben Ebbink / L. & E. / (916) 319-2091