BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 970|
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THIRD READING
Bill No: AB 970
Author: Nazarian (D)
Amended: 6/29/15 in Senate
Vote: 21
SENATE LABOR & IND. REL. COMMITTEE: 3-1, 6/10/15
AYES: Mendoza, Leno, Mitchell
NOES: Stone
NO VOTE RECORDED: Jackson
SENATE APPROPRIATIONS COMMITTEE: 5-1, 6/22/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NOES: Bates
NO VOTE RECORDED: Nielsen
ASSEMBLY FLOOR: 48-26, 5/18/15 - See last page for vote
SUBJECT: Labor Commissioner: enforcement of employee claims
SOURCE: California Rural Legal Assistance Foundation
DIGEST: This bill authorizes the Labor Commissioner to issue a
citation to enforce local minimum wage and overtime laws, as
well as against an employer or person acting on behalf of an
employer for violations of existing law related to
reimbursements for expenses.
Senate Floor Amendments of 6/29/15 (1) clarify that the Labor
Commissioner, pursuant to a request from the local entity, may
issue a citation to an employer for the violation of a local
overtime or minimum wage ordinance if the local entity has not
cited the employer for the violation, and (2) clarify that if
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the Labor Commissioner issues a citation the local entity shall
not cite the employer for the same violation.
ANALYSIS:
Existing law:
1)Authorizes the Labor Commissioner to investigate and enforce
statutes and orders of the Industrial Welfare Commission that,
among other things, specify the requirements for the payment
of wages by employers.
2)Provides the Labor Commissioner with the authority to
investigate employee complaints and allows the Labor
Commissioner to hold a hearing in any action to recover wages,
including orders of the Industrial Welfare Commission. The
Labor Commissioner may require an award in the amount of the
wages owed, plus interest. (Labor Code §§ 98 & 98.2)
3)Sets civil penalties for any employer or other person acting
on behalf of an employer who violates, or causes to be
violated, a section of this chapter or any provision
regulating hours and days of work in any order of the
Industrial Welfare Commission ranging from $50 upon first
violation for each underpaid employee for each pay period to
$100 for subsequent violations. (Labor Code §558)
4)States that if upon inspection or investigation the Labor
Commissioner determines that a person had paid or caused to be
paid a wage for overtime work in violation of provisions
relating to hours and days of work in any order of the
Industrial Welfare Commission, the Labor Commissioner may
issue a citation. (Labor Code §558)
5)States that the minimum wage for employees fixed by the
Industrial Welfare Commission is the minimum wage to be paid
to employees, and the payment of a less wage than the minimum
is unlawful. (Labor Code §1197)
6)Provides that any employer who pays an employee a wage less
than the minimum fixed by the Industrial Welfare Commission
shall be subject to a civil penalty, restitution of wages,
liquidated damages payable to the employee, and any applicable
penalties. (Labor Code §1197.1)
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7)States that if upon inspection or investigation the Labor
Commissioner determines that a person had paid or caused to be
paid a wage less than the minimum wage the Labor Commissioner
may issue a citation. (Labor Code §1197.1)
8)States that an employer shall indemnify (or compensate) his or
her employee for all necessary expenditures or losses incurred
by the employee in direct consequence of the discharge of his
or her duties, or of his or her obedience to the directions of
the employer, even though unlawful, unless the employee at the
time of obeying the directions believed them to be harmful.
(Labor Code §2802)
This bill:
1)Specifies that where a local entity has the legal authority to
issue a citation against an employer for a violation of any
applicable local overtime or minimum wage law, the Labor
Commissioner, pursuant to a request from the local entity, may
issue a citation against an employer for a violation of a
local overtime or minimum wage law of the local entity has not
cited the employer for the same violation.
2)Provides that, if upon inspection or investigation the Labor
Commissioner determines that a person has violated overtime or
minimum wage requirements of existing law, including "any
applicable local overtime or minimum wage law," the Labor
Commissioner may issue a citation.
3)States that the Labor Commissioner shall not issue a citation
against an employer for a violation of any applicable local
overtime or minimum wage law if the local entity with
jurisdiction in the matter has cited the employer for the
violation.
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 reimbursement
obligations for expenses.
Comments
Need for this bill? Currently, California workers can file a
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civil action or may file an administrative complaint with the
Labor Commissioner to recover unpaid wages. As was discussed
above, an employee who waged a successful civil action to
receive unpaid minimum wage balances would be entitled to
recover the full amount of the unpaid balance of wages,
including interest, reasonable attorney's fees and costs of
suit. Liquidated damages could then also be awarded. After AB
240 (Bonilla, Chapter 272, Statutes of 2011) was enacted, a
worker can also be awarded liquidated damages through the Labor
Commissioner hearing process.
A worker may also recover owed wages as a result from an
inspection from the Division of Labor Standards and
Enforcement's (DLSE) Bureau of Field Enforcement (BOFE). 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 DLSE will attempt
to collect wages for all employees found to have been underpaid.
However, the DLSE cannot collect liquidated damages, requiring
the worker to file an administrative complaint with DLSE to
collect liquidated damages.
Labor Code Sections 558, 1197, and 1197.1, provide a legal
framework for enforcement of state minimum wage and overtime
wage requirements. Local municipalities, such as San Francisco,
Oakland, Berkeley, and San Jose, have implemented local living
wage laws.
According to the author, existing law does not specify that
recovery of local minimum wage or overtime wage requirement owed
to a worker can be included in the Labor Commissioner/ BOFE
minimum wage citation process and states that higher minimum
wage and indemnity charges can only be recovered by a worker
either in a civil action or via a Berman hearing.
The author notes that this bill allows the Labor Commissioner to
issue a citation for employer violations of illegal tool or
equipment deductions and encourages compliance with higher local
living wage laws by giving the Labor Commissioner the discretion
to cite when finding violations of those laws. The author argues
that AB 970 is intended to eliminate significant gaps in the
Labor Commissioner's citation authority and promotes government
efficiency in labor law enforcement, strengthens the deterrent
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effect of its enforcement efforts, and increases the probability
of workers recovering unpaid wages. The author also notes that
AB 970 ensures that workers have the same monetary relief
whether they pursue their claims administratively, by way of the
courts or via the Labor Commissioner's existing authority.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee, the Department
of Industrial Relations indicates that it will incur annual
ongoing costs of $125,000 (special funds) to implement the
provisions of this bill.
SUPPORT: (Verified6/30/15)
California Rural Legal Assistance Foundation (source)
Bet Tzedek Legal Services
California Immigrant Policy Center
California Labor Federation, AFL-CIO
California Nurses Association
California Teamsters Public Affairs Council
Consumer Attorneys of California
Maintenance Cooperation Trust Fund
Roots of Change
The Wage Justice Center
OPPOSITION: (Verified6/30/15)
Associated Builders and Contractors of California
Association General Contractors
California Ambulance Association
California Association for Health Services at Home
California Automotive Wholesalers' Association
California Bankers Association
California Chamber of Commerce
California Employment Law Council
California Grocers Association
California Manufacturers and Technology Association
California New Car Dealership Association
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California Pool & Spa Association
California Restaurant Association
California Trucking Association
Chamber of Commerce Mountain View
El Centro Chamber of Commerce & Visitors Bureau
Fullerton Chamber of Commerce
Greater Conejo Valley Chamber of Commerce
Greater Fresno Area Chamber of Commerce
Lake Tahoe South Shore 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
ARGUMENTS IN SUPPORT: According to proponents, 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.
Proponents note that 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. Proponents note that under existing 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, proponents argue that 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 specifically authorizes the Labor Commissioner to
issue citations in such situations.
However, proponents state 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
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employer has violated an applicable local wage law.
Lastly, proponents contend 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.
Proponents argue that 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. Proponents note that 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 bill,
stating that it will subject employers to layers of penalties
and enforcement efforts, increased annual assessments, and a
limited opportunity to appeal.
First, 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.
Lastly, 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
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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.
ASSEMBLY FLOOR: 48-26, 5/18/15
AYES: Alejo, Bloom, Bonilla, Bonta, Burke, Calderon, Campos,
Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman,
Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,
Gomez, Gonzalez, Gordon, Roger Hernández, Holden, Irwin,
Jones-Sawyer, Levine, Lopez, Low, McCarty, Medina, Mullin,
Nazarian, O'Donnell, Quirk, Rendon, Ridley-Thomas, Salas,
Santiago, Mark Stone, Thurmond, Ting, Weber, Williams, Wood,
Atkins
NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang,
Chávez, Dahle, Beth Gaines, Gallagher, Gray, Grove, Hadley,
Harper, Jones, Lackey, Linder, Maienschein, Mayes, Obernolte,
Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk
NO VOTE RECORDED: Brown, Kim, Mathis, Melendez, Perea,
Rodriguez
Prepared by:Deanna Ping / L. & I.R. / (916) 651-1556
7/1/15 11:27:19
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