BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1723| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 1723 Author: Nazarian (D) Amended: As introduced Vote: 21 SENATE LABOR & INDUSTRIAL RELATIONS COMMITTEE : 4-1, 6/25/14 AYES: Hueso, Leno, Padilla, Mitchell NOES: Wyland SENATE APPROPRIATIONS COMMITTEE : 5-2, 8/4/14 AYES: De León, Hill, Lara, Padilla, Steinberg NOES: Walters, Gaines ASSEMBLY FLOOR : 54-24, 5/28/14 - See last page for vote SUBJECT : Employees: wages SOURCE : California Rural Legal Assistance Foundation DIGEST : This bill 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. ANALYSIS : 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. CONTINUED AB 1723 Page 2 2.Provides the Labor Commissioner with the authority to investigate employee complaints and allows the Labor Commissioner to hold a hearing in any action to recover wages, including orders of the Industrial Welfare Commission. The Labor Commissioner may require an award in the amount of the wages owed, plus interest. 3.Allows the Division of Labor Standards Enforcement or Department of Industrial Relations to commence and prosecute a civil action to recover unpaid minimum wages or unpaid overtime compensation, including interesting thereon. 4.Provides that an employee who receives less than the minimum wage is entitled to recover in a civil action, the unpaid balance of the full amount of the minimum wage, liquidated damages in an amount equal to the wages unlawfully unpaid and interest thereon, reasonable attorney's fees and costs of suit. 5.Provides that, in a citation for a minimum wage violation issued by the Labor Commissioner, an employer shall be subject to a specified civil penalty and restitution of wages. 6.Provides that if an employer willfully fails to pay any wages of an employee who is discharged or who quits, the wages of 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. 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. Prior Legislation AB 442 (Nazarian, Chapter 735, Statutes of 2013) authorized the CONTINUED AB 1723 Page 3 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. AB 469 (Swanson, Chapter 655, Statutes of 2011) known as the Wage Theft Prevention Act of 2011, the bill enacted 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 and makes it a misdemeanor if an employer willfully violates specified wage statutes or orders, among other provisions. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No According to the Senate Appropriations Committee, the Department of Industrial Relations indicates that it will 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. SUPPORT : (Verified 8/4/14) California Rural Legal Assistance Foundation (source) California Federation of Teachers, AFL-CIO California Labor Federation, AFL-CIO OPPOSITION : (Verified 8/4/14) Air Conditioning Trade Association Associated Builders and Contractors - San Diego Chapter California Association for Health Services at Home California Association of Licensed Security Agencies, Guards and Associates California Chamber of Commerce California Farm Bureau Federation CONTINUED AB 1723 Page 4 California Pool and Spa Association California Professional Association of Specialty Contractors California Restaurant Association California Retailers Association National Federation of Independent Business Plumbing-Heating-Cooling Contractors Association of Western Electrical Contractors Association Western Growers Association ARGUMENTS IN SUPPORT : Proponents argue that AB 1723 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. Proponents argue that the Division of Labor Standards and Enforcement currently lack the statutory authority to recover application "waiting time" penalties after a citation for a minimum wage violation. Proponents maintain that without the legal authority to recover these monetary penalties for workers as part of a Bureau of Field Enforcement 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. Proponents also argue that because the payment of 'waiting time' penalties, where applicable, is mandatory, of the Labor Commissioner/Bureau of Field Enforcement does not recover them when it cites for a minimum wage violation, workers will simply file a subsequent "Berman hearing" administrative claim or a civil action to recover them. Proponents contend that these hearings will create unnecessary and completely avoidable costs for DLSE, or the courts, and will also result in possibly lengthy delays for workers seeking to be made whole after theft of their wages. ARGUMENTS IN OPPOSITION : Opponents argue that the expansion of the capacity of investigators employed by the Labor Commission places employers at a disadvantage because the establishment of underpayments should remain under the purview of an administrative hearing. Opponents note that during a hearing the complaint, investigation, and the employer's documentation are reviewed. Opponents contend that if the hearing process is eliminated it is uncertain if the investigator will have the same information. Opponents further state that the bill also expands penalties, which include liquidated damages, which elevates the need for a fair hearing CONTINUED AB 1723 Page 5 to ensure employers have equal protections under the law. Opponents also suggest the inclusion of an amendment to ensure that an investigator properly considers the heightened standard of "willfulness" for purposes of imposing waiting time penalties. Opponents requested AB 1723 be amended to include that any citation must specify in writing the basis for finding willfulness to justify an assessment of waiting time penalties. Opponents argue that by specifying this standard in writing, it will provide an employer with adequate notice in order to assist the employer in determining whether an appeal of the citation is necessary. ASSEMBLY FLOOR : 54-24, 5/28/14 AYES: Alejo, Ammiano, Bloom, Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau, Chesbro, Cooley, Dababneh, Daly, Dickinson, Eggman, Fong, Fox, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gray, Hall, Roger Hernández, Holden, Jones-Sawyer, Levine, Lowenthal, Medina, Mullin, Muratsuchi, Nazarian, Pan, Perea, John A. Pérez, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Weber, Wieckowski, Williams, Yamada, Atkins NOES: Achadjian, Allen, Bigelow, Chávez, Conway, Dahle, Donnelly, Beth Gaines, Gorell, Grove, Hagman, Harkey, Jones, Linder, Logue, Maienschein, Mansoor, Melendez, Nestande, Olsen, Patterson, Wagner, Waldron, Wilk NO VOTE RECORDED: Frazier, Vacancy PQ:nl 8/6/14 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED