BILL ANALYSIS                                                                                                                                                                                                    

                                                                     AB 970

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          970 (Nazarian)

          As Amended  August 24, 2015

          Majority vote

          |ASSEMBLY:  |48-26 |(May 18, 2015) |SENATE: |      |(August 31,      |
          |           |      |               |        |25-14 |2015)            |
          |           |      |               |        |      |                 |
          |           |      |               |        |      |                 |

          Original Committee Reference:  L. & E.

          SUMMARY:  Makes a number of changes related to the citation  
          authority of the Labor Commissioner.

          The Senate amendments:

          1)Specify that in a jurisdiction where a local entity has the  
            legal authority to issue a citation against an employer for a  
            violation of any applicable local minimum wage or overtime  
            law, the Labor Commissioner, pursuant to a request from the  
            local entity, may issue a citation against the employer.

          2)Specify that if the Labor Commissioner issues a citation, the  
            local entity shall not cite the employer for the same  


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          3)Provide that this does not change the applicability of local  
            minimum wage laws to any entity.

          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, the Department of Industrial Relations would incur  
          ongoing costs of $125,000 (special funds) to implement the  
          provisions of this bill.

          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.

          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  

          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.


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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  

          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  

          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  


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          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: