BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1506|
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THIRD READING
Bill No: AB 1506
Author: Roger Hernández (D)
Amended: 6/30/15 in Senate
Vote: 21
SENATE LABOR & IND. REL. COMMITTEE: 5-0, 6/24/15
AYES: Mendoza, Stone, Jackson, Leno, Mitchell
SENATE JUDICIARY COMMITTEE: 6-0, 7/7/15
AYES: Jackson, Moorlach, Hertzberg, Leno, Monning, Wieckowski
NO VOTE RECORDED: Anderson
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 51-26, 5/4/15 - See last page for vote
SUBJECT: Labor Code Private Attorneys General Act of 2004
SOURCE: Author
DIGEST: This bill, under the Labor Code Private Attorneys
General Act of 2004 (PAGA), provides an employer with the right
to cure a violation of failing to provide its employees with a
wage statement containing the inclusive dates of the pay period
and the name and address of the legal entity that is the
employer before an employee may bring a civil action under the
act. This bill limits the employer's right to cure such a
violation to once in a 12-month period.
ANALYSIS:
Existing law:
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1)Requires every employer, semimonthly or at the time of each
payment of wages, to provide each employee with an accurate
itemized statement, in writing, that contains the following
information (Labor Code §226):
a) Gross wages earned;
b) Total hours worked by the employee (except salaried
exempt employees);
c) Piece rate units earned and the applicable rate, if paid
on a piece rate basis;
d) All deductions;
e) Net wages earned;
f) Inclusive dates of the pay period;
g) Name of the employee and the last four digits of his/her
social security number or employee identification number;
h) Name and address of the legal entity that is the
employer and, if the employer is a farm labor contractor,
the name and address of the legal entity that secured the
services of the employer; and
i) All applicable hourly rates during the pay period and
the corresponding number of hours the employee worked at
each hourly rate.
2)Provides an employee suffering injury as a result of a knowing
and intentional failure by an employer to comply with the
itemized statement requirements the right to recover specified
damages and reasonable attorney's fees and costs.
3)Defines "suffering injury" as an employer's failure to provide
a wage statement with accurate and complete information and
the employee cannot promptly and easily determine from the
wage statement alone one or more of the following:
a) Amount of gross wages or net wages paid or any of the
other information required to be provided on the itemized
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wage statement.
b) Which deductions the employer made to determine net
wages paid.
c) The name and address of the employer, and if the
employer is a farm labor contractor, the name and address
of the legal entity that secured the services.
d) Name of the employee and last four digits of his/ her
Social Security Number or employee ID.
4)Provides, under PAGA, that any provision of the Labor Code
that authorizes a civil penalty to be assessed and collected
for a violation of this code, may, as an alternative, be
recovered through a civil action in addition to the awarding
of reasonable attorney's fees and costs.
5)Provides, under PAGA, that for serious violations, including
failure to provide any of the information required to be
itemized above, an aggrieved employee may bring a civil action
against an employer after giving written notice to the Labor
and Workforce Development Agency (LWDA) and the employer of
the alleged violation, including the facts and theories to
support the allegation. If no action is taken by the LWDA,
the aggrieved employee may commence a civil action.
6)Authorizes, for other specified violations not otherwise
enumerated as serious, an employer to "cure" the alleged
violation before a civil action may commence, meaning the
employer abates each violation to be in compliance with the
law and all aggrieved employees are made whole. However, an
employer may not avail himself or herself of the cure
provisions more than three times in a 12-month period for the
same violation(s).
This bill:
1)Removes from the list of serious violations under PAGA an
employer's failure to include in the wage statement (a) the
inclusive dates of the pay period, and (b) the name and
address of the legal entity that is the employer.
2)Provides an employer with the opportunity to "cure" alleged
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violations of these two requirements before a PAGA claim may
be filed.
3)Specifies that "cure" in this case means that the employer has
provided a fully compliant, itemized wage statement to each
aggrieved employee for each pay period of the previous
three-years from the date of the notice.
4)Prohibits an employer from availing himself or herself of the
notice and cure provisions for failing to accurately include
these items on the itemized wage statement more than once in a
12-month period for the same violation(s) contained in the
notice, regardless of the worksite location.
5)Removes cross-references to repealed statutes.
Background
Private Attorneys General Act of 2004. The Labor Code Private
Attorneys General Act went into effect on January 1, 2004
pursuant to SB 796 (Dunn, Chapter 906, Statutes of 2003).
According to the legislative findings accompanying the enactment
of SB 796, adequate financing of essential labor law enforcement
functions is necessary to achieve maximum compliance with state
labor laws in the underground economy and to ensure an effective
disincentive for employers to engage in unlawful and
anticompetitive business practices. Prior to the bills
enactment, staffing levels for state labor law enforcement
agencies had declined and, unfortunately, have been unable to
keep up with the growth of the labor market. In enacting PAGA,
the Legislature emphasized the importance of providing another
avenue for the collection of civil penalties for violations of
the Labor Code. PAGA authorized aggrieved employees to take
these cases to court while also ensuring that state labor law
enforcement agencies' enforcement actions have primacy over any
private enforcement efforts.
The provisions of PAGA were significantly amended by SB 1809
(Dunn, Chapter 221, Statutes of 2004) by enacting specified
procedural and administrative requirements that must be met
prior to bringing a private action to recover civil penalties.
Provisions of SB 1809 also expanded judicial review of PAGA
claims by requiring courts to review and approve any penalties
sought as part of a proposed settlement agreement, and those
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portions of settlements concerning violations of health and
safety laws. In addition, courts were authorized to award a
lesser amount if to do so otherwise would result in an award
that is unjust, arbitrary and oppressive, or confiscatory.
Procedural Requirements under PAGA. As discussed above, SB 1809
significantly amended the provisions of the PAGA by enacting
specified procedural and administrative requirements. SB 1809
essentially enacted three different procedural requirements
depending on the type of violation and established "notice and
cure" provisions for violations of Labor Code not enumerated as
serious. For these violations, the aggrieved employee must give
written notice to the LWDA and the employer of the alleged
violation and the employer may cure the violation within 33 days
and give written notice to the employee and the LWDA of its
actions. If the violation is cured, no civil action pursuant to
PAGA may commence. If the alleged violation is not cured, a
civil action pursuant to PAGA may commence, with some exceptions
for disputes on the alleged violation being cured. Please see
Senate Labor and Industrial Relations Committee analysis for
further discussion on these items.
Recent concerns over PAGA litigation for "minor" violations.
Existing law requires every employer to furnish each of its
employees with an accurate itemized statement, as specified,
that shows, among other things, the inclusive dates of the
period for which the employee is paid and the name and address
of the legal entity that is the employer. Under existing law,
failure to provide all information required to be included in
the wage statement is a serious violation subject to PAGA and
does not provide an employer the right to cure the violation
before the aggrieved employee can sue the employer for civil
penalties.
Proponents argue that wage statement violations are one area in
which employers have seen an increase in frivolous litigation
regarding technical violations that do not harm or injure the
employee. These examples include: (1) placing the company logo
on the wage statement rather than spelling out the name of the
employer; (2) failing to include items like "LLC", "LP", or
"Inc." after the name of the employer; and (3) listing the last
date of the pay period, but not the beginning date of the pay
period (even though the employees are paid every two weeks).
Some employers have reported that because the civil penalties
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can be quite large, even for such minor violations, they have
been forced to settle such claims rather than risk higher
penalty awards by litigating the claims further.
Proponents cite Elliot v. Spherion Pacific Work, LLC (2008) 572
F.Supp.2d 1169, as an example of this problem. In this case,
Elliot, the plaintiff, a temporary employee, alleged her
employer failed to pay in a timely manner, failed to pay her for
time worked, and issued wage statements that did not include all
of the information required by state and federal law, and the
complaint included a claim for civil penalties under PAGA. With
respect to the wage statements, the plaintiff argued that the
employer included a truncated version of the employer's name on
the wage statements, which referred to "Spherion Pacific Work,
LLC," but the full name of the employer was Spherion Pacific
Workforce, LLC.
The court discussed the legislative intent of the wage statement
requirement that an employer provide its legal name and address,
and noted that "[i]f the legislature had intended to require an
employer to show its complete name on wage statements, it would
have stated so in this section. Indeed, the specificity
required in the remainder of section 226(a) -- requiring, for
example, various subcategories of information relating to pay
rates, hours worked, and deductions -- demonstrates that, when
the legislature drafted this statute, it well knew how to
require highly detailed information on wage statements. By
contrast, instead of requiring an employer to state its
'complete' or 'registered' name, section 226(a)(8) only requires
the employer to state its 'name and address.' Because Defendant
was the 'legal entity' that employed Plaintiff, and because
Defendant showed its 'name and address,' Defendant complied with
section 226(a)(8)." (Id., pp. 1179, 1180.)
The Elliot court also discussed whether the plaintiff suffered
any injury due to the truncated employer's name on the wage
statement and reviewed other cases in which an employer failed
to provide the required information. The Elliot court held that
the employee provided no evidence that she suffered injury of
any sort due to the employer's use of a slightly truncated name
on the wages statements. Although the court ultimately dismissed
this cause of action, the employer incurred unnecessary legal
costs and attorney's fees to have it dismissed.
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SB 1255 (Wright, Chapter 843, Statutes of 2012) attempted to
address frivolous wage statement actions by defining what
constitutes suffering injury from the employer's failure to
provide the required information in a wage statement. However,
proponents argue that numerous PAGA lawsuits have been filed for
technical violations of wage statements that do not cause any
harm to employees.
Related Legislation
AB 588 (Grove, 2015) is substantially similar to this bill and
provides an employer with the right to cure a violation of wage
statement law requirements before an employee may bring a civil
action under PAGA. AB 588 allows employers to cure for all items
required on the wage statement while this bill only allows
employers to cure for failure to accurately include dates of the
pay period and the name and address of the legal entity that is
the employer before. AB 588 is currently in the Assembly Labor
and Employment Committee.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified8/18/15)
Air Conditioning Trade Association
Associated Builders and Contractors - San Diego Chapter
Associated Builders and Contractors of California
Associated General Contractors
Association of California Insurance Companies
Brea Chamber of Commerce
California Ambulance Association
California Apartment Association
California Asian Pacific Chamber of Commerce
California Association of Bed and Breakfast Inns
California Association of Licensed Security Agencies, Guards and
Associations
California Association of Realtors
California Bankers Association
California Business Properties Association
California Business Roundtable
California Chamber of Commerce
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California Cotton Ginners Association
California Cotton Growers Association
California Defense Counsel
California Employment Law Council
California Farm Bureau Federation
California Forestry Association
California Fresh Fruit Association
California Grocers Association
California Hotel and Lodging Association
California League of Food Processors
California Manufacturers and Technology Association
California Pool & Spa Association
California Professional Association of Specialty Contractors
California Restaurant Association
California Retailers Association
California State Council of the Society for Human Resource
Management
Camarillo Chamber of Commerce
Chambers of Commerce Alliance Ventura & Santa Barbara Counties
Civil Justice Association of California
Computing Technology Industry Association
Family Business Association of California
Goleta Valley Chamber of Commerce
Greater Bakersfield Chamber of Commerce
Irvine Chamber of Commerce
Lodi Chamber of Commerce
National Federation of Independent Business
North Orange County Chamber of Commerce
Oxnard Chamber of Commerce
Plumbing-Heating-Cooling Contractors Association of California
Rancho Cordova Chamber of Commerce
Sierra Pacific Industries
Simi Valley Chamber of Commerce
Southwest California Legislative Council
Torrance Area Chamber of Commerce
Valley Industry & Commerce Association
Verizon
Western Agriculture Processors Association
Western Electrical Contractors Association
Western Growers Association
Wine Institute
OPPOSITION: (Verified8/18/15)
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None received
ARGUMENTS IN SUPPORT: Proponents argue that Labor Code
provisions regarding information required to be included in wage
statements is one area in which employers have seen an increase
in frivolous litigation regarding technical violations that do
not harm or injure the employee. They cite as an example a
company who was sued for millions of dollars in PAGA penalties
and attorney's fees in Yolo County because the itemized wage
statement only included the ending date of the pay period, yet
specified the employee was paid on a weekly basis. Proponents
cite an April 16, 2014 Los Angeles Daily Journal article titled
"An Alternative to Employee Class Actions," which reported that
PAGA lawsuits have increased over 400% between 2005 and 2013,
given the ease of filing such cases without satisfying class
action requirements and the potential financial windfall.
The author and proponents believe that this bill will help curb
this type of frivolous litigation under PAGA with regard to only
two sections of Labor Code, by allowing an employer 33 days to
cure any alleged violation. If the employer cannot cure the
violation, then the employee would still be able file a civil
action and obtain any unpaid wages, penalties and attorney's
fees. They argue that this reform would provide the appropriate
balance of allowing an employer to correct unintentional errors
for minor violations without the threat of a multi-million
dollar lawsuit that could put the employer out of business,
while still protecting the employee's ability to obtain accurate
information.
ASSEMBLY FLOOR: 51-26, 5/4/15
AYES: Alejo, Bloom, Bonilla, Bonta, Brown, Burke, Calderon,
Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman,
Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,
Gomez, Gonzalez, Gordon, Gray, Roger Hernández, Holden, Irwin,
Jones-Sawyer, Levine, Low, McCarty, Medina, Mullin, Nazarian,
Obernolte, O'Donnell, Perea, Quirk, Rendon, Ridley-Thomas,
Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber,
Williams, Wood, Atkins
NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang,
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Chávez, Beth Gaines, Gallagher, Grove, Hadley, Harper, Jones,
Kim, Lackey, Linder, Maienschein, Mathis, Mayes, Melendez,
Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk
NO VOTE RECORDED: Campos, Dahle, Lopez
Prepared by:Alma Perez / L. & I.R. / (916) 651-1556
8/19/15 20:39:18
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