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.