BILL ANALYSIS Ó
AB 795
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Date of Hearing: April 22, 2015
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Roger Hernández, Chair
AB 795
(Low) - As Amended March 26, 2015
SUBJECT: Employment: Department of Industrial Relations: wage
claims
SUMMARY: Requires the Department of Industrial Relations (DIR)
to submit a report to the Legislature the amount of time it
takes for wage claims to receive a preliminary hearing date.
EXISTING LAW: Authorizes the Labor Commissioner from DIR to
investigate and enforce labor laws and orders of the Industrial
Welfare Commission (IWC) that, among other things, include wage
claims. Also, provides for criminal and civil penalties for
violations of statutes and orders of the IWC regarding payment
of wages.
FISCAL EFFECT: Unknown
COMMENTS: According to a 2013 report "Winning Wage Justice" by
the National Employment Law Project (NELP) shortchanging workers
of the wages they are owed - wage theft - is becoming a defining
trend of the 21st century labor market. It takes many forms for
workers, including being paid less than the minimum wage or
other agreed upon wage, working "off-the-clock" without pay,
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getting less than time-and-a half for overtime hours, having
tips stolen, being misclassified as an "independent contractor"
instead of an employee and underpaid, having illegal deductions
taken out of paychecks, or simply not being paid at all. It
spans a number of industries as well.
The wage theft crisis in this state is well-documented. A recent
UCLA study<1> reported that an estimated $26 million in wages
per week are stolen from low-wage workers in Los Angeles County
alone. Adding to the crisis are the backlogs clogging the
timely processing of wage claim hearings for impacted workers.
Wage Claims Adjudication
As the largest unit within the Division of Labor Standards
Enforcement (DLSE), Wage Claims Adjudication (WCA) handles over
30,000 new wage claims a year in 16 offices across the state.
Under Section 98 of the California Labor Code, workers may file
a claim before the DLSE for unpaid wages (including minimum wage
and overtime), other compensation, and penalties
through an administrative claims process. Commonly known as the
"Berman" process, this process has been heralded by the
Legislature and the courts as an indispensable alternative to
costly litigation for both workers and employers. When a Berman
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<1> Wage Theft and Workplace Violations in Los Angeles: The
Failure of Employment and Labor Law for Low-Wage Workers,
Milkman, Gonzalez & Narro, Institute for Research on Labor and
Employment, UCLA (2010).
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claim is filed, WCA staff typically hold a settlement conference
and hearing on the claim. In addition, WCA staff administer
wage claims brought by garment workers under a separate
statutorily-mandated process (known as "AB 633") for
investigating and adjudicating garment claims.
From 2009 to 2011 it was taking an average of seven months for a
wage claim to be heard. The backlog for AB 633 claims was even
worse with more than half of those open cases filed two to three
years prior. Prior to 2008, DLSE did not officially track the
time it took for a wage claim to be heard. As a result of the
LC working to raise the bar on enforcement efforts there has
been a small reduction in the length of time for wage claim to
be heard. The length of time has been reduced to between five
and six months for Berman claims to be heard.<2>
Although the DLSE has made progress to reduce the delays for
wage claim hearings and AB 633 cases in the last two years, more
work needs to be done to further expedite the wage claims
hearing process.
The author argues that wage theft exacts a heavy socio-economic
toll on workers, particularly low-wage workers and their
communities. The proliferation of wage theft, particularly in
the underground economy, underscores the fact that effective,
strong enforcement of labor laws is needed now more than ever
---------------------------
<2> Division of Labor Standards Enforcement Report, May 2013
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before, to give working people a chance in our economy. Abiding
businesses who play by the rules suffer the economic
consequences when government enforcement of labor laws is
lackluster or nonexistent; unscrupulous employers operating
illegally are able to gain an unfair competitive advantage and
ignite a race to the bottom that lowers even the most basic
labor standards.
Additionally the author points out, when California workers are
not paid their earned wages, they have less money to spend for
basic necessities, which means less consumer spending to help
spur economic growth. This adversely impacts not only local
communities and economies, but also the entire state. The
DLSE's enforcement activities not only put hard-earned wages in
the pockets of workers, but also help generate tax revenue and
substantial monetary penalties for the state.
This bill requires DIR to submit a report to the Legislature
detailing the length of time it takes for wage claims to receive
a hearing date.
REGISTERED SUPPORT / OPPOSITION:
Support
None on file.
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Opposition
None on file.
Analysis Prepared by:Lorie Alvarez / L. & E. / (916) 319-2091