BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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          |SENATE RULES COMMITTEE            |                       AB 1723|
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                                    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. 
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          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  

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          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

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          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  

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          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

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