BILL ANALYSIS                                                                                                                                                                                                    Ó

                             Senator Tony Mendoza, Chair
                                2015 - 2016  Regular 

          Bill No:               AB 2261      Hearing Date:    June 22,  
          |Author:    |Roger Hernández                                      |
          |Version:   |June 14, 2016                                        |
          |Urgency:   |No                     |Fiscal:    |Yes              |
          |Consultant:|Alma Perez-Schwab                                    |
          |           |                                                     |
             Subject:  Division of Labor Standards Enforcement:  duties

          KEY ISSUES
          Should the Legislature authorize the Division of Labor Standards  
          Enforcement to commence an investigation, with or without  
          receiving an employee complaint, of an employer that it suspects  
          to have discharged or otherwise discriminated against an  
          individual in violation of labor law?    

          Should these DLSE initiated investigations follow the same  
          process and timeline required under employee initiated  

           Existing law:  

             1)   Prohibits an employer from discharging, discriminating  
               or retaliating against an employee for engaging in  
               specified protected activity, or for filing a claim related  
               to his or her rights that are under the jurisdiction of the  
               Labor Commissioner (LC).  
          (Labor Code § 98.6)


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             2)   Authorizes any person who believes that he or she has  
               been discharged or otherwise discriminated against in  
               violation of any law under the jurisdiction of the Labor  
               Commissioner to file a complaint within six months of the  
               occurrence, as specified, with the Division of Labor  
               Standards Enforcement (DLSE).  (Labor Code §98.7)

             3)   Entitles employees discharged as a result of such  
               protected activity to reinstatement and reimbursement for  
               lost wages and interest thereon, as well as the payment of  
               reasonable attorney's fees associated with any hearing held  
               in investigating the complaint.  

             4)   Establishes timelines for the submittal of such claims  
               to the division, as well as processes to be followed by the  
               Labor Commissioner in investigating these claims, including  
               that of notifying the respondent and employer of the  
               pending investigation within a specified timeframe. 

             5)   Provides that in the enforcement of these provisions,  
               there is no requirement that an individual exhaust  
               administrative remedies or procedures before pursuing any  
               other rights and remedies under any other law.
          This Bill  would authorize the Division of Labor Standards  
          Enforcement to, with or without receiving a complaint, commence  
          an investigation of an employer that it suspects to have  
          discharged or otherwise discriminated against an individual in  
          violation of any law under the jurisdiction of the Labor  
          This Bill  would require the assigned investigator to prepare and  
          submit an investigation report to the Labor Commissioner based  
          on its findings. 

           This Bill  would require the DLSE in investigating employers  
          under this provision, to follow the existing processes and  
          requirements for employee initiated cases of unlawful discharge  
          or discrimination. 

          1.  Need for this bill? 


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             California law contains several provisions emphasizing a  
            strong public policy to protect employees against retaliation  
            for exercising their rights. This is an acknowledgement of the  
            fact that substantive labor and employment laws are  
            meaningless if workers are reluctant to exercise their rights  
            for fear of employer retaliation. Although certain provisions  
            of law contain their own anti-retaliation provisions, two  
            specific provisions of the California Labor Code provide  
            general protection against retaliation for engaging in certain  
            protected activity. Labor Code §98.6 prohibits an employer  
            from discharging, retaliating, or taking other adverse  
            employment action against an employee because the employee has  
            engaged in protected conduct, as specified, such as filing a  
            complaint or claim with the Labor Commissioner. The Labor Code  
            also contains a "whistleblower" statute (Labor Code §1102.5)  
            which prohibits an employer from retaliating against an  
            employee for disclosing information to a government or law  
            enforcement agency, or to others, or for participating in an  
            investigation or hearing, if the employee has reasonable cause  
            to believe that the information discloses a violation of or  
            noncompliance with existing law.

            Claims alleging retaliation may be pursued via a civil action  
            or by filing an administrative claim with the Labor  
            Commissioner.  However, according to the author, despite these  
            laws providing protection and encouraging the reporting of  
            abuse, the reality is that many workers do not report employer  
            abuse out of fear of losing their jobs. And the Labor  
            Commissioner currently lacks the authority to take action or  
            file an independent citation alleging that an employer has  
            unlawfully retaliated against an employee or employees.  The  
            author believes this bill is necessary to give the Division of  
            Labor Standards Enforcement the authority to investigate  
            employers, with or without receiving an employee complaint, it  
            suspects may have unlawfully discharged or discriminated  
            against an employee in violation of the law. 

          2.  Similar Rights under Existing Law  :
            It is important to note that the right to initiate an  
            investigation into a labor law violation by a state entity is  
            not a new concept as existing law already affords other  
            enforcement rights to the Labor Commissioner (LC). 
            Under Labor Code §90.5, the Labor Commissioner must establish  


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            the Bureau of Field Enforcement, which is administratively and  
            physically separate from the offices of the Division of Labor  
            Standards Enforcement which accepts and investigates  
            individual employee complaints. BOFE is responsible for, among  
            others, the investigation and enforcement of statutes covering  
            workers' compensation insurance coverage, unlicensed  
            contractors, and wage orders. Under BOFE, the LC has the  
            authority to investigate employers for these labor law  
            violations, even without an employee initiated complaint.  

            Also under the jurisdiction of the Labor Commissioner, Labor  
            Code §558 provides that if, upon inspection or investigation,  
            the LC determines that a person has violated overtime  
            requirements, regulations regarding hours and days of work, or  
            any applicable local overtime law, the Labor Commissioner may  
            issue a citation. 

          3.  Proponent Arguments  :
            According to the author, under existing law, in order to  
            pursue an administrative claim for retaliation, an employee  
            must come forward and file a claim with the Labor  
            Commissioner.  The LC currently does not have the authority to  
            independently cite an employer for retaliation, even if the  
            LC, for example, comes across evidence of retaliation during  
            an investigation by the Bureau of Field Enforcement. This, the  
            author argues, can be a particular barrier in retaliation  
            cases, since the employee complaint model forces an employee  
            who has already been retaliated against to come forward and  
            individually complain, often risking further retaliation by  
            the employer.  According to the author, this bill will simply  
            provide the LC with the authority to independently investigate  
            an employer for unlawful retaliation.
            According to the author, in 2014, the Labor Commissioner  
            received 3,800 complaints of employer retaliation. Retaliation  
            claims filed with the Labor Commissioner have increased by 48  
            percent from 2011 to 2014, an increase of 16 percent per year.  
            In reality this figure represents only a fraction of the true  
            picture because it only represents those brave workers who  
            were courageous enough to come forward and file a claim.   
            Proponents argue that as long as unscrupulous employer can  
            retaliate against workers by disciplining, demoting, or firing  
            them for voicing concerns about wages and workplace safety  
            issues with impunity, labor laws will go unenforced and all  


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            workers will suffer.  Furthermore, they argue that good  
            employers are forced to compete against bad actors that  
            perpetuate low-wages and illegal practices.  

          4.  Opponent Arguments  :

            Opponents argue that this bill expands the authority of the  
            Division of Labor Standards Enforcement (DLSE) to investigate  
            and cite an employer for alleged retaliation, even without an  
            employee complaint. Opponents argue that current procedures  
            for employee initiated complaints handled by the Labor  
            Commissioner have safeguards for all parties involved to  
            ensure that there is adequate opportunity to present evidence  
            in a timely and efficient manner and pursue an appeal or  
            litigation if necessary.  They argue that while recent  
            amendments to the bill appear to incorporate time restrictions  
            regarding events that may be considered for purposes of  
            retaliation, the bill still allows the Labor Commissioner to  
            unilaterally initiate an investigation of an employer, even  
            when no employee has submitted a complaint.  

            Opponents are concerned with the potential harassment,  
            disruption, and strain that these Labor Commissioner initiated  
            investigations will impose on employers to be constantly  
            subjected to random investigations for alleged retaliation.   
            Moreover, they argue that the Labor Code already provides  
            numerous anti-retaliation provisions that specifically protect  
            an employee against any adverse employment action for  
            exercising their rights under the Labor Code. Opponents argue  
            that it is unnecessary to expose employers to ongoing threats  
            of investigation and litigation under this bill, when these  
            existing protections already exist.   

          5.  Double Referral  :

            This bill has been double-referred and, if approved by this  
            committee, it will be sent to the Senate Judiciary Committee  
            for a hearing.

          California Labor Federation (Sponsor)
          California Faculty Association
          California Immigrant Policy Center 


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          California Professional Firefighters 
          California Rural Legal Assistance Foundation 

          Acclamation Insurance Management Services
          African American Farmers of California
          Allied Managed Care 
          Associated Builders and Contractors of California
          Associated General Contractors
          California Association of Winegrape Growers
          California Chamber of Commerce
          California Chapter American Fence Association
          California Chapters of the National Electrical Contractors  
          California Citrus Mutual
          California Farm Bureau Federation
          California Fence Contractors Association
          California Fresh Fruit Association
          California Grocers Association
          California League of Food Processors
          California Legislative Council of the Plumbing, Heating and  
          Piping Industry 
          California New Car Dealers Association
          California Newspaper Publishers Association
          California Pool and Spa Association
          California Restaurant Association
          California Retailers Association
          California Trucking Association
          Coalition of Small and Disabled Veteran Business
          CSAC Excess Insurance Authority 
          Family Business Association
          Flasher Barricade Association
          League of California Cities
          Nisei Farmers League
          United Contractors 
          Western Carwash Association
          Western Plant Health Association
          Wine Institute

                                      -- END --


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