BILL ANALYSIS Ó
AB 970
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Date of Hearing: April 8, 2015
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Roger Hernández, 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