BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular Session

          AB 970 (Nazarian) - Labor Commissioner: enforcement of employee  
          claims.
          
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          |Version: April 15, 2015         |Policy Vote: L. & I.R. 3 - 1    |
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          |Urgency: No                     |Mandate: Yes                    |
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          |Hearing Date: June 22, 2015     |Consultant: Robert Ingenito     |
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          This bill does not meet the criteria for referral to the  
          Suspense File.




          Bill  
          Summary: AB 970 would authorize the Labor Commissioner (1) to  
          issue a citation to enforce local minimum wage and overtime  
          laws, and (2) 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.


          Fiscal  
          Impact: The Department of Industrial Relations (DIR) indicates  
          that it would incur annual ongoing costs of $125,000 (special  
          funds) to implement the provisions of the bill. 

          Background:  Wage theft is a term used to describe labor law  
          violations such as not paying an employee minimum wages or  
          overtime, not paying for off-the-clock work, tip stealing, and  







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          not paying final wages. Under current law, when an employer  
          fails to pay wages due, the employee has the right to file a  
          claim against the employer with DIR's Division of Labor  
          Standards Enforcement (DLSE), which is directed by the Labor  
          Commissioner. After conducting an investigation, the Labor  
          Commissioner may hold an administrative conference or hearing,  
          or both. If a party is dissatisfied with the Commissioner's  
          decision, it can appeal to the appropriate civil court. When a  
          worker wins a favorable decision, the process of collecting the  
          award can be difficult and ineffective. Some employers may have  
          already hidden their cash assets, declared bankruptcy, or  
          otherwise become judgment-proof.
          Under current law, the Labor Commissioner has the authority to  
          cite for violations of state minimum wage but not for higher  
          local minimum wage violations. The only way to address such  
          claims currently is through the wage claim hearing process.


          A worker may also recover owed wages as a result from an  
          inspection from the Division of Labor Standards and  
          Enforcement's Bureau of Field Enforcement (BOFE) within DIR.  
          BOFE conducts inspections of industries to ensure compliance  
          with the Labor Code. While BOFE does not pursue individual wage  
          claims, at times the investigation results in an audit of the  
          employer's time and payroll records. If this occurs, the  
          Division will attempt to collect wages for all employees found  
          to have been underpaid. However, the Division cannot collect  
          liquidated damages.


          Additionally, current law requires an employer to compensate  
          employees for "all necessary expenditures or losses" incurred in  
          direct consequence of duty. A 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. Workers may file a civil action to recover  
          these illegal deductions from their pay, or may seek to recover  
          them in a wage claim hearing. 


          Proposed Law: This bill would do all of the following:


                 Authorize the Labor Commissioner to issue a citation if,  








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               upon inspection or investigation, it is determined that a  
               person has violated overtime requirements of existing law,  
               including any applicable local overtime law.


                 Authorize the Labor Commissioner to issue a citation if,  
               upon inspection or investigation, it is determined a person  
               has paid less than the minimum wage under applicable state  
               or local law.


                 Authorize 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.


                 Prohibit the Labor Commissioner from issuing a citation  
               for the above offenses if the local entity with  
               jurisdiction in the matter has cited or has initiated an  
               investigation against the employer for the same violation.




          Related  
          Legislation: 
                 AB 1723 (Nazarian, Chapter 886, Statutes of 2014)  
               authorized the Labor Commissioner to include "waiting time"  
               penalties in wage citations.


                 AB 442 (Nazarian, Chapter 735, Statutes of 2013)  
               authorized the Labor Commissioner to collect liquidated  
               damages from an employer who pays an employee less than  
               minimum wage.


          Staff Comments: As noted above, BOFE currently engages in field  
          enforcement and has the authority to cite for violations of  
          minimum wage, but this bill would apply a local wage calculation  
          rather than the state minimum wage. This new authorization would  
          potentially require more investigative and other workload within  
          DIR, at an ongoing annual cost of $125,000.








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          Any local government costs resulting from the mandate in this  
          measure are not state-reimbursable because the mandate only  
          involves the definition of a crime or the penalty for conviction  
          of a crime.




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