BILL ANALYSIS                                                                                                                                                                                                    Ó






                                                                     AB 795


                                                                     Page A


          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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                                                                     Page B


          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  
          ---------------------------


          <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.














                                                                     AB 795


                                                                     Page E



          Opposition


          None on file.




          Analysis Prepared by:Lorie Alvarez / L. & E. / (916) 319-2091