BILL ANALYSIS                                                                                                                                                                                                    ”

                                                                       AB 970

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          970 (Nazarian)

          As Amended  April 15, 2015

          Majority vote

          |Committee       |Votes |Ayes                  |Noes                |
          |Labor           |5-2   |Roger HernŠndez, Chu, |Harper, Patterson   |
          |                |      |Low, McCarty,         |                    |
          |                |      |Thurmond              |                    |
          |Appropriations  |11-5  |Gomez, Bloom, Bonta,  |Bigelow, Chang,     |
          |                |      |Calderon, Eggman,     |Gallagher, Jones,   |
          |                |      |Eduardo Garcia,       |Wagner              |
          |                |      |Holden, Quirk,        |                    |
          |                |      |Rendon, Weber, Wood   |                    |
          |                |      |                      |                    |
          |                |      |                      |                    |

          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.


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          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)Provides that the Labor Commissioner shall not issue a citation  
            against an employer for a violation of any applicable local  
            overtime law or local minimum wage law if the local entity with  
            jurisdiction in the matter has cited or has initiated an  
            investigation against the employer for the same violation.

          4)Makes related and conforming changes.

          5)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  

          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee, this bill will result in ongoing costs of approximately  
          $125,000 (special funds) to the Department of Industrial  

          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  


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          Labor Commissioner's field enforcement authority and will  
          strengthen her efforts to stop wage theft.

          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.

          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  

          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  


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          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.

          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.

          In addition, 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 issued in error rather  
          than the citation process. 

          Analysis Prepared by:                                               
          Ben Ebbink / L. & E. / (916) 319-2091  FN: 0000189


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