BILL ANALYSIS Ó
AB 795
Page A
ASSEMBLY THIRD READING
AB
795 (Low)
As Amended March 26, 2015
Majority vote
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|Committee |Votes |Ayes |Noes |
| | | | |
| | | | |
|----------------+------+---------------------+---------------------|
|Labor |6-1 |Roger Hernández, |Harper |
| | |Chu, Low, McCarty, | |
| | |Patterson, Thurmond | |
| | | | |
|----------------+------+---------------------+---------------------|
|Appropriations |17-0 |Gomez, Bigelow, | |
| | |Bonta, Calderon, | |
| | |Chang, Daly, Eggman, | |
| | |Gallagher, | |
| | | | |
| | | | |
| | |Eduardo Garcia, | |
| | |Gordon, Holden, | |
| | |Jones, Quirk, | |
| | |Rendon, Wagner, | |
| | |Weber, Wood | |
| | | | |
| | | | |
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AB 795
Page B
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: According to Assembly Appropriations Committee,
minor absorbable costs to the DIR to produce and submit the
report.
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, 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
AB 795
Page C
University of California, Los Angeles (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 California Labor Code Section 98, 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 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" [(Steinberg), Chapter 554, Statutes of 1999])
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
----------------------------
<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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Labor Commissioner 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 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.
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<2> Division of Labor Standards Enforcement Report, May 2013
AB 795
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Analysis Prepared by:
Lorie Alvarez / L. & E. / (916) 319-2091 FN:
0000572