BILL ANALYSIS                                                                                                                                                                                                    ”



                                                                     AB 970


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          Date of Hearing:  April 8, 2015


                     ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT


                               Roger HernŠndez, Chair


          AB 970  
          (Nazarian) - As Introduced February 26, 2015


          SUBJECT:  Labor Commissioner:  enforcement of employee claims


          SUMMARY:  Makes a number of changes related to the citation  
          authority of the Labor Commissioner.  Specifically, this bill:  


          1)Provides that, if upon inspection or investigation the Labor  
            Commissioner determines that a person has violated overtime  
            requirements of existing law, including "any applicable local  
            overtime law," the Labor Commissioner may issue a citation.


          2)Provides that, if upon inspection or investigation, the Labor  
            Commissioner determines that a person has paid less than the  
            minimum wage under applicable state or local law, the Labor  
            Commissioner may issue a citation.


          3)Makes related and conforming changes.


          4)Authorizes the Labor Commissioner to issue a citation against  
            an employer or person acting on behalf of an employer for  
            violations of existing law related to reimbursements for  
            expenses.








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          FISCAL EFFECT:  Unknown


          COMMENTS:  This bill is sponsored by the California Rural Legal  
          Assistance Foundation (CRLAF).  They note that Governor Brown  
          recently has signed several new statutes into law that addressed  
          some of the weaknesses or gaps in the Labor Commissioner's legal  
          authority to effectively enforce wage laws in a field  
          investigation or to fully adjudicate wage related claims in a  
          Berman administrative wage claim hearing.


          They argue that this bill closes two other important gaps in the  
          Labor Commissioner's field enforcement authority and will  
          strengthen her efforts to stop wage theft.


          Reimbursement Under Labor Code Section 2802

          Existing Labor Code Section 2802 requires an employer to  
          indemnify his or her employees for "all necessary expenditures  
          or losses" incurred by the employee in direct consequence of his  
          or her duties.  A very common violation of this provision  
          involves illegal charges for tools or equipment necessary to  
          perform the job, but which are deducted from workers' pay  
          notwithstanding.

          CRLAF states that, under current law, workers may file a civil  
          action to recover these illegal deductions from their pay, or  
          may seek to recover them in a Berman wage claim hearing.  
          However, the Labor Commissioner cannot issue a citation for this  
          violation, even if she determines upon inspection or  
          investigation that the charges are illegal and have not been  
          repaid to the worker.  This bill would specifically authorize  
          the Labor Commissioner to issue citations in such situations.
          Citation Authority for Local Minimum Wage or Overtime Provisions









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          Existing law provides a legal framework for enforcement of state  
          minimum wage and overtime wage requirements.  However, the  
          sponsor states that as more local California authorities have  
          enacted higher minimum wage laws applicable to the lowest paid  
          workers in their jurisdictions, the Labor Commissioner has been  
          processing claims to enforce these higher wage requirements in  
          Berman wage hearings.  They argue that this bill recognizes this  
          evolution and authorizes the Labor Commissioner to also issue a  
          citation when she determines an employer has violated an  
          applicable local wage law.

          CRLAF contends that this bill is likely to make a significant  
          contribution to encouraging compliance with higher local living  
          wage laws by giving the Labor Commissioner the discretion to  
          cite when she finds violations of these laws.  Employers would  
          be subject to the same citation amounts, and have the same  
          appeal rights, as would apply if they were cited for a violation  
          of state minimum wage or overtime requirements.  As noted above,  
          the Labor Commissioner has been enforcing these local wage  
          requirements in her wage claim hearings; this bill simply  
          extends authority to cite when violations are encountered in the  
          field.

          ARGUMENTS IN OPPOSITION

          A coalition of employer groups, including the California Chamber  
          of Commerce, opposes this measure, stating that it will subject  
          employers to layers of penalties and enforcement efforts,  
          increased annual assessments, and a limited opportunity to  
          appeal.



          First, opponents argue that under this bill, an employer would  
          be subjected to local enforcement for any violation of a local  
          minimum wage ordinance in addition to state enforcement by the  
          Labor Commissioner, thereby layering state and local penalties  
          onto an employer for the same violation. They contend that a  
          local minimum wage mandate is a local issue and its enforcement  








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          should reside with the city or county that has enacted the  
          measure, especially when such local entities have already  
          implemented adequate enforcement measures to deal with  
          violations.





          Second, opponents note that beginning in 2009 the costs of state  
          labor law enforcement were primarily transferred from the  
          General Fund to private sector employers through annual  
          assessments on workers' compensation premiums, which are based  
          upon the employers' payroll. Accordingly, any increase in the  
          Labor Commissioner's jurisdiction will likely result in an  
          increase to all employers' annual assessments. Employers  
          statewide should not have to pay for these increased assessments  
          for the enforcement of local laws where they are not located.





          Finally, opponents state that under the citation process, an  
          employer challenging a citation can request an administrative  
          hearing to contest the citation and may only challenge the  
          administrative ruling pursuant to a writ of mandate.  A writ of  
          mandate limits the superior court's scope of review of the  
          evidence and arguments the court may consider for purposes of  
          challenging the administrative ruling.  Comparatively, in wage  
          claim adjudication through the Labor Commissioner's office, an  
          employer has a right to a trial de novo to superior court if the  
          employer wants to challenge an administrative ruling, which  
          provides the court with unlimited review of the underlying  
          complaint as well as any new issues, evidence or arguments  
          raised on appeal.  Accordingly, to the extent the Labor  
          Commissioner is resolving any local minimum wage violations  
          through the wage claim process, that process provides a fairer  
          opportunity for an employer to appeal a ruling it believes was  








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          issued in error rather than the citation process. 

          REGISTERED SUPPORT / OPPOSITION:




          Support


          Asian Americans Advancing Justice-Asian Law Caucus


          Bet Tzedek Legal Services'


          California Employment Lawyers Association


          California Immigrant Policy Center


          California Labor Federation, AFL-CIO


          California Nurses Association


          California Rural Legal Assistance Foundation (Sponsor)


          California Teamsters Public Affairs Council


          Wage Justice Center












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          Opposition


          Associated Builders and Contractors of California


          California Association for Health Services at Home


          California Bankers Association


          California Chamber of Commerce


          California Employment Law Council


          California Grocers Association 


          California Manufacturers and Technology Association


          California Pool & Spa Association


          California Restaurant Association


          California Trucking Association


          CAWA - Representing the Automotive Parts Industry


          Chamber of Commerce Mountain View










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          El Centro Chamber of Commerce & Visitors Bureau


          Fullerton Chamber of Commerce


          Greater Conejo Valley Chamber of Commerce


          Greater Fresno Area Chamber of Commerce


          National Federation of Independent Business


          Palm Desert Area Chamber of Commerce


          Redondo Beach Chamber of Commerce and Visitors Bureau


          San Jose Silicon Valley Chamber of Commerce


          Santa Clara Chamber of Commerce & Convention-Visitor's Bureau 


          Santa Maria Valley Chamber of Commerce Visitor and Convention  
          Bureau


          Simi Valley Chamber of Commerce


          South Bay Association of Chambers of Commerce


          Western Electrical Contractors Association









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          Analysis Prepared by:Ben Ebbink / L. & E. / (916) 319-2091