BILL ANALYSIS                                                                                                                                                                                                    ”



                                                                  AB 2074
                                                                  Page  1

          Date of Hearing:   May 7, 2014

                     ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
                               Roger HernŠndez, Chair
            AB 2074 (Roger HernŠndez) - As Introduced:  February 20, 2014
           
          SUBJECT  :   Recovery of wages: liquidated damages.

           SUMMARY  :   Provides that the statute of limitations for  
          liquidated damages for failure to pay the minimum wage is the  
          same period as the statute of limitations for actions to recover  
          the unpaid wages.  

           EXISTING LAW  :

          1)Requires all employers to pay employees not less than the  
            state minimum wage.

          2)Authorizes an employee to bring an administrative or civil  
            claim for the unpaid balance of minimum wages owed to that  
            employee.

          3)Provides that in any action to recover unpaid minimum wages,  
            an employee shall be entitled to recover liquidated damages in  
            an amount equal to the wages unlawfully unpaid and interest  
            thereon.

          4)Provides that if the employer demonstrates to the satisfaction  
            of the court or the Labor Commissioner that the act or  
            omission giving rise to the action was in good faith and that  
            the employer had reasonable grounds for believing that the act  
            or omission was not a violation of any provision of the Labor  
            Code relating to minimum wage, or an order of the commission,  
            the court or the Labor Commissioner may, as a matter of  
            discretion, refuse to award liquidated damages or award any  
            amount of liquidated damages not exceeding the amount  
            specified above.

           FISCAL EFFECT  :   None

           COMMENTS  :   Current law requires all employers to pay workers  
          not less than the state minimum wage.  In addition, existing law  
          provides that if an employer fails to pay the minimum wage, the  
          worker is entitled to liquidated damages in an amount equal to  
          the unpaid wages owed.  This provision of liquidated damages is  








                                                                  AB 2074
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          an acknowledgement of the seriousness of minimum wage violations  
          and is intended to act at a deterrent for an employer to violate  
          the law.

          The statute of limitations for failure to pay the minimum wage  
          is generally three years.  However, in a recent California Court  
          of Appeal decision, the court held that the statute of  
          limitations for the liquidated damages is only one year.  Bain  
          v. Tax Reducers, 219 Cal. App. 4th 110 (2013).

          According to the author, this disparity in the statute of  
          limitations dilutes the deterrent effect of liquidated damages  
          for minimum wage violations.


          In short, the result of the court's decision is that an employee  
          can recover for three years of minimum wage violations.   
          However, the worker can only recover liquidated damages for a  
          one year period of time.  Although existing law contains other  
          civil penalties for failure to pay minimum wage, liquidated  
          damages are payable to the worker.  Therefore, the author  
          contends that as a result of the court's decision, there is no  
          effective penalty for the employer for years two and three.  If  
          they are found to have violated the law, the only remedy is to  
          make them pay the minimum wages they should have paid if they  
          were following the law.

          The author states that the deterrent effect of the liquidated  
          damages can only be fulfilled if the worker is able to recover  
          them for the entire statutory period.  Therefore, this bill  
          provides that the statute of limitation for liquidated damages  
          for failure to pay minimum wage is the same as the statute of  
          limitations for the wage claims themselves.

           ARGUMENTS IN SUPPORT  :

          Supporters argue that this bill will bring consistency between  
          the statute of limitations for claims of liquidated damages for  
          minimum wage violations and claims for unpaid minimum wages.

          Supporters state that allowing for the claim of unpaid wages,  
          yet only allowing for the liquidated damages for one year, is a  
          misstep in justice.  Restricting the ability to obtain  
          liquidated damages dilutes the deterrent effect on employers who  
          fail to pay the minimum wage.  A damages scheme that only adds  








                                                                  AB 2074
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          an additional liquidated damages award for one year of an unpaid  
          minimum wage claim sends a statement that there is no real  
          penalty for such worker exploitation beyond one year.

          They conclude that workers should be able to recover liquidated  
          damages for the entire statutory period.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          California Conference of Machinists
          California Conference of the Amalgamated Transit Union
          California Federation of Teachers
          California Labor Federation, AFL-CIO
          California Rural Legal Assistance Foundation
          California School Employees Association
          California State Association of Electrical Workers
          California State Pipe Trades Council
          California Teamsters Public Affairs Council
          Communications Workers of America, District 9
          Engineers & Scientists, IFTPE Local 20
          International Longshore and Warehouse Union, Coast Division
          Professional & Technical Engineers, IFPTE Local 21
          UNITE HERE
          Utility Workers Union of America, Local 132
          Western States Council of Sheet Metal Workers


           Opposition 
           
          None on file.
           
          Analysis Prepared by  :    Ben Ebbink / L. & E. / (916) 319-2091