Amended in Assembly May 4, 2016

Amended in Assembly April 13, 2016

Amended in Assembly March 29, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2899

Introduced by Assembly Member Roger Hernández

March 1, 2016

An act to amend Section 1197.1 of the Labor Code, relating to employment.

LEGISLATIVE COUNSEL’S DIGEST

AB 2899, as amended, Roger Hernández. Minimum wage violations: challenges.

Under existing law, any employer or other person acting either individually or as an officer, agent, or employee of another person, who pays or causes to be paid to any employee a wage less than the minimum fixed by applicable state or local law or an order of the Industrial Welfare Commission, is subject to a civil penalty, restitution of wages, liquidated damages payable to the employee, and any applicable specified penalties, as provided. Existing law provides notice and hearing requirements under which a person against whom a citation has been issued, can request a hearing to contest proposed assessment of a civil penalty, wages, liquidated damages, and any applicable penalties. Existing law further provides that after a hearing with the Labor Commissioner, a person contesting a citation may file a writ of mandate, within 45 days, with the appropriate superior court.

This bill would require a person seeking a writ of mandate contesting the Labor Commissioner’s ruling, to post a bond with the Labor Commissioner as specified, in an amount equal to the unpaid wages assessed under the citation, excluding penalties. The bill would require that the bond be issued in favor of the unpaid employees, and ensure that the person seeking the writ makes prescribed payments pursuant to the proceedings. begin insert The bill would provide that the proceeds of the bond, sufficient to cover the amount owed, would be forfeited to the employee if the employer fails to pay the amounts owed within 10 days from the conclusion of the proceedings, as specified. end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 1197.1 of the Labor Code is amended to
read:

1197.1.  

(a) Any employer or other person acting either
individually or as an officer, agent, or employee of another person,
who pays or causes to be paid to any employee a wage less than
the minimum fixed by an applicable state or local law, or by an
order of the commission shall be subject to a civil penalty,
restitution of wages, liquidated damages payable to the employee,
and any applicable penalties imposed pursuant to Section 203 as
follows:

(1) For any initial violation that is intentionally committed, one
hundred dollars ($100) for each underpaid employee for each pay
period for which the employee is underpaid. This amount shall be
in addition to an amount sufficient to recover underpaid wages,
liquidated damages pursuant to Section 1194.2, and any applicable
penalties imposed pursuant to Section 203.

(2) For each subsequent violation for the same specific offense,
two hundred fifty dollars ($250) for each underpaid employee for
each pay period for which the employee is underpaid regardless
of whether the initial violation is intentionally committed. This
amount shall be in addition to an amount sufficient to recover
underpaid wages, liquidated damages pursuant to Section 1194.2,
and any applicable penalties imposed pursuant to Section 203.

(3) Wages, liquidated damages, and any applicable penalties
imposed pursuant to Section 203, recovered pursuant to this section
shall be paid to the affected employee.

(b) If, upon inspection or investigation, the Labor Commissioner
determines that a person has paid or caused to be paid a wage less
than the minimum under applicable law, the Labor Commissioner
may issue a citation to the person in violation. The citation may
be served personally or by registered mail in accordance with
subdivision (c) of Section 11505 of the Government Code. Each
citation shall be in writing and shall describe the nature of the
violation, including reference to the statutory provision alleged to
have been violated. The Labor Commissioner shall promptly take
all appropriate action, in accordance with this section, to enforce
the citation and to recover the civil penalty assessed, wages,
liquidated damages, and any applicable penalties imposed pursuant
to Section 203 in connection with the citation.

(c) (1) If a person desires to contest a citation or the proposed
assessment of a civil penalty, wages, liquidated damages, and any
applicable penalties imposed pursuant to Section 203 therefor, the
person shall, within 15 business days after service of the citation,
notify the office of the Labor Commissioner that appears on the
citation of his or her appeal by a request for an informal hearing.
The Labor Commissioner or his or her deputy or agent shall, within
30 days, hold a hearing at the conclusion of which the citation or
proposed assessment of a civil penalty, wages, liquidated damages,
and any applicable penalties imposed pursuant to Section 203 shall
be affirmed, modified, or dismissed.

(2) The decision of the Labor Commissioner shall consist of a
notice of findings, findings, and an order, all of which shall be
served on all parties to the hearing within 15 days after the hearing
by regular first-class mail at the last known address of the party
on file with the Labor Commissioner. Service shall be completed
pursuant to Section 1013 of the Code of Civil Procedure. Any
amount found due by the Labor Commissioner as a result of a
hearing shall become due and payable 45 days after notice of the
findings and written findings and order have been mailed to the
party assessed. A writ of mandate may be taken from this finding
to the appropriate superior court. The party shall pay any judgment
and costs ultimately rendered by the court against the party for the
assessment. The writ shall be taken within 45 days of service of
the notice of findings, findings, and order thereon.

(3) As a condition to filing a petition for a writ of mandate, the
petitioner seeking the writ shall first post a bond with the Labor
Commissioner equal to the total amount of any minimum wages,
liquidated damages, and overtime compensation that are due and
owing as determined pursuant to subdivision (b) of Section 558,
as specified in the citation being challenged. The bond amount
shall not include amounts for penalties. The bond shall be issued
by a surety duly authorized to do business in this state, shall be
issued in favor of unpaid employees, and shall ensure that the
petitioner makes payments as set forth in this paragraph. If a
decision is entered which affirms or modifies the amounts for
minimum wages, liquidated damages, or overtime compensation,
the petitioner shall pay the amounts owed for the specified items
included in a clerk’s judgment entered under subdivision (f) based
on the decision, or pursuant to a court judgment in a writ of
mandate proceeding under paragraph (2). If the request for a writ
is withdrawn or dismissed without entry of judgment, the petitioner
shall pay the amounts owed for the specified items pursuant to the
citation, or the administrative decision if a pending writ of mandate
is dismissed prior to a court decision, unless the parties have
executed a settlement agreement for payment of some other
amount. In the case of a settlement agreement, the petitioner shall
pay the amount he or she is obligated to pay under the terms of
the settlement.

begin insert

(4) If the employer fails to pay the amount of minimum wages,
liquidated damages, or overtime compensation owed within 10
days of the entry of judgment, dismissal or withdrawal of writ, or
the execution of a settlement agreement, a portion of the
undertaking, described in paragraph (3), equal to the amount
owed, or the entire undertaking if the amount owed exceeds the
undertaking, shall be forfeited to the employee.

end insert

(d) A person to whom a citation has been issued shall, in lieu
of contesting a citation pursuant to this section, transmit to the
office of the Labor Commissioner designated on the citation the
amount specified for the violation within 15 business days after
issuance of the citation.

(e) When no petition objecting to a citation or the proposed
assessment of a civil penalty, wages, liquidated damages, and any
applicable penalties imposed pursuant to Section 203 is filed, a
certified copy of the citation or proposed civil penalty, wages,
liquidated damages, and any applicable penalties imposed pursuant
to Section 203 may be filed by the Labor Commissioner in the
office of the clerk of the superior court in any county in which the
person assessed has or had a place of business. The clerk,
immediately upon the filing, shall enter judgment for the state
against the person assessed in the amount shown on the citation
or proposed assessment of a civil penalty, wages, liquidated
damages, and any applicable penalties imposed pursuant to Section
203.

(f) When findings and the order thereon are made affirming or
modifying a citation or proposed assessment of a civil penalty,
wages, liquidated damages, and any applicable penalties imposed
pursuant to Section 203 after hearing, a certified copy of these
findings and the order entered thereon may be entered by the Labor
Commissioner in the office of the clerk of the superior court in
any county in which the person assessed has property or in which
the person assessed has or had a place of business. The clerk,
immediately upon the filing, shall enter judgment for the state
against the person assessed in the amount shown on the certified
order.

(g) A judgment entered pursuant to this section shall bear the
same rate of interest and shall have the same effect as other
judgments and be given the same preference allowed by the law
on other judgments rendered for claims for taxes. The clerk shall
make no charge for the service provided by this section to be
performed by him or her.

(h) 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 law, the Labor Commissioner,
pursuant to a request from the local entity, may issue a citation
against an employer for a violation of any applicable local
minimum wage law if the local entity has not cited the employer
for the same violation. If the Labor Commissioner issues a citation,
the local entity shall not cite the employer for the same violation.

(i) The civil penalties provided for in this section are in addition
to any other penalty provided by law.

(j) This section shall not apply to any order of the commission
relating to household occupations.

(k) This section does not change the applicability of local
minimum wage laws to any entity.