BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair AB 1723 (Nazarian) - Employment: Wages Amended: As Introduced Policy Vote: L&IR 4-1 Urgency: No Mandate: No Hearing Date: August 4, 2014 Consultant: Robert Ingenito This bill does not meet the criteria for referral to the Suspense File. Bill Summary: AB 1723 would authorize the Labor Commissioner to include "waiting time" penalties in wage citations. Fiscal Impact: The Department of Industrial Relations (DIR) indicates that it would incur costs of $110,000 in the first year and $94,000 ongoing (special funds) to implement the provisions of the bill. Future savings could occur if the bill were to result in fewer administrative appeals. Background: Current law provides for three options for the recovery of unpaid minimum wages. First, an employee may file an administrative wage claim with the Labor Commissioner. This process provides for an administrative hearing (usually referred to as a "Berman hearing") for the adjudication of claims, including wages, penalties, and other demands for compensation, including liquidated damages. 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. Using this option, an employee shall also be entitled to liquidated damages in an amount equal to the wages unlawfully paid. Finally, the Labor Commissioner may issue a citation for failure to pay the state minimum wage after an inspection or investigation. The employer is 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. Under a different provision of existing law, when an employer willfully fails to pay any wages of an employee who is AB 1723 (Nazarian) Page 1 discharged or who quits, the wages of the employee continue as a penalty for up to 30 days. 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. Currently, the Labor Commissioner lacks the statutory authority to recover "waiting time" penalties as part of a citation for a minimum wage violation. Proposed Law: This bill would provide 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 states 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 pay 'waiting time' penalties - which under statute is defined as the wages of an employee who is discharged or quits from the due date until paid or until an action is commenced. The wages shall not continue for more than 30 days. Related Legislation: AB 442 (Nazarian), Chapter 735, Statutes of 2013 - authorized the Labor Commissioner to collect liquidated damages from an employer who pays an employee less than minimum wage. AB 240 (Bonilla), Chapter 272, Statutes of 2012 - 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.