BILL ANALYSIS Ó AB 1506 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1506 (Roger Hernández) As Amended August 31, 2015 2/3 vote. Urgency -------------------------------------------------------------------- |ASSEMBLY: |51-26 |(May 4, 2015) |SENATE: |40-0 |(September 2, | | | | | | |2015) | | | | | | | | | | | | | | | -------------------------------------------------------------------- ---------------------------------------------------------------------- | | | | | | | | | | | | |COMMITTEE VOTE: |6-0 |September 8, |RECOMMENDATION: |concur | | | |2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ---------------------------------------------------------------------- (L. & E.) Original Committee Reference: L. & E. SUMMARY: Amends the Labor Code Private Attorneys General Act of 2004 (PAGA) to provide an employer with the right to cure a AB 1506 Page 2 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. The Senate amendments delete the contents of this bill and instead: 1)Remove from PAGA's enumerated list of serious violations an employer's failure to include in the wage statement 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. 2)Require an aggrieved employee to provide notice of the alleged violations and a right to cure to the employer for failing to detail 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. 3)Include in the definition of "cure" that a violation of the detailed wage statement that fails to provide 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 is only considered cured upon a showing that the employer has provided a fully compliant, itemized wage statement to each aggrieved employee for each pay period for the three-year period prior to the date of the employee's notice. 4)Prohibit an employer from availing himself or herself of the notice and right to cure provisions, with respect to allegations of failing to provide a wage statement that details 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, more than once in a 12-month period for the same violation or violations contained in the notice, regardless of the location of the worksite. AB 1506 Page 3 5)Add co-authors. 6)Add an urgency clause. EXISTING LAW: 1)Under PAGA, authorizes an aggrieved employee to bring a civil action to recover specified civil penalties that would otherwise be assessed and collected by the Labor and Workforce Development Agency, on behalf of the employee and other current or former employees for the violation of certain provisions affecting employees. (Labor Code (LC) Section 2699.) 2)Provides a list of enumerated, serious Labor Code violations (including, but not limited to, violations of wage and hour, overtime, child labor, agricultural, entertainment and garment industry labor laws, and public works laws) for which an aggrieved employee may commence a civil action for civil penalties that could otherwise be assessed or collected by the Labor and Workforce Development Agency (LWDA). (LC Section 2699.5.) This list includes a violation for failing to provide an accurate itemized statement in writing detailing specified wage, employer, and employee information. (Id.) 3)Requires an employer to provide, as specified, either as a detachable part of the check, draft, or voucher paying the employee's wages, or separately when wages are paid by personal check or cash, an accurate itemized statement in writing showing a) gross wages earned, b) total hours worked by the employee, as specified, c) the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis, d) all deductions, provided that all deductions made on written orders of the employee may be aggregated and shown as one item, e) net wages earned, f) the inclusive dates of the period for which the employee is paid, AB 1506 Page 4 g) the name of the employee and only the last four digits of his or her social security number or an employee identification number other than a social security number, h) the name and address of the legal entity that is the employer and, if the employer is a farm labor contractor, as defined, the name and address of the legal entity that secured the services of the employer, and i) all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee and, beginning July 1, 2013, if the employer is a temporary services employer as defined in LC Section 201.3, the rate of pay and the total hours worked for each temporary services assignment. (LC Section 226(a).) 4)Provides 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 for civil penalties after the employee gives written notice by certified mail to the Labor and Workforce Development Agency and the employer of the specific provisions alleged to have been violated, including the facts and theories to support the alleged violation. (LC Section 2699.3(a)(1).) The aggrieved employee may commence a civil action, after a specified waiting period, upon receiving notice from the Agency that it does not intend to investigate the alleged violation, or, if after an investigation, the Agency does not intend to issue a citation. (LC Section 2699.3(a)(2).) 5)Provides that for other specified Labor Code violations or violations not otherwise enumerated as serious violations, an employer is entitled to notice of the violations, as specified, and has a right to cure the violation before the aggrieved employee may bring a civil action against an employer for civil penalties. (LC Section 2699.3(c)(2)(A).) However, an employer may not avail himself or herself of the notice and cure provisions more than three times in a 12-month period for the same violation or violations contained in the notice, regardless of the location of the worksite. (LC Section 26933(c)(2)(B).) AB 1506 Page 5 6)Defines "cure" to mean that the employer abates each violation alleged by any aggrieved employee, the employer is in compliance with the underlying statutes as specified in the employee's notice, and any aggrieved employee is made whole. FISCAL EFFECT: According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs. COMMENTS: 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. (LC Sections 226(a)(6), (8).) Existing law provides that 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. (LC Sections 2699.3, 2699.5.) 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. Proponents note that the April 16, 2014 , Los Angeles Daily Journal article titled "An Alternative to Employee Class Actions," documents 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. Proponents argue that this bill would help curb this type of frivolous litigation under PAGA with regard to only two sections of Labor Code Section 226, specifically paragraphs (a)(6) (requiring the inclusive dates of the pay period) and (8) (employer's legal name and address), by allowing an employer 33 days to cure any alleged violation. Under PAGA, AB 1506 Page 6 for non-serious labor violations, the employer is entitled to notice of the violations and a right to cure before the employee can file the PAGA action. (LC Section 2699.3(c).) If the employer cannot cure the violation, then the employee would still be able to file a civil action and obtain any unpaid wages, penalties, and attorney's fees. Proponents contend that this bill would provide the appropriate balance of allowing an employer to correct unintentional errors 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. The Consumer Attorneys of California raised the concern that this bill would allow employers to violate the wage statement requirements, be given the opportunity to correct the wage statements, correct the wage statements, then violate the law again. To address this concern, the bill was recently amended to limit an employer's right to cure pay statement violations, as specified in this bill, to one time in a 12-month period. There is currently no opposition on file to this bill. Analysis Prepared by: Ben Ebbink / L. & E. / (916) 319-2091 FN: 0002280