BILL ANALYSIS Ó AB 2899 Page 1 Date of Hearing: April 20, 2016 ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT Roger Hernández, Chair AB 2899 (Roger Hernández) - As Amended April 13, 2016 SUBJECT: Minimum wage violations: challenges SUMMARY: Establishes a wage bond requirement, as specified, for the filing of a writ of mandate with the superior court by an employer challenging a citation and decision by the Labor Commissioner (LC) finding a violation of the law. Specifically, this bill: 1)Provides that, as a condition to filing a petition for a writ of mandate, the employer seeking the writ shall first post a bond with the LC equal to the total amount of any minimum wages, liquidated damages, and overtime compensation that are due and owing as specified in the citation being challenged. The bond amount shall not include amounts for penalties. 2)Specifies that 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 employer makes payments as specified. 3)Contains other related and conforming changes. AB 2899 Page 2 FISCAL EFFECT: Unknown COMMENTS: This bill would establish an "appeal bond" requirement for an employer who seeks a writ of mandate challenging a decision of the LC following a citation by the Bureau of Field Enforcement (BOFE). The bond established by this bill would be similar to a bond required of employers who appeal an adverse decision following an employee wage claim filed with the LC. Current Bond Requirements for Appeals of Employee Wage Claims Existing law authorizes employees (in lieu of filing a civil proceeding) to file an administrative claim for unpaid wages or similar damages with the LC. This is an administrative adjudicatory process often referred to as the "Berman hearing" process. Under current law, a losing party may appeal a LC decision to the superior court. The appeal is heard by the superior court on a "de novo" basis, meaning the appeal is heard "anew" as if the original hearing had not taken place. Prior to 2000, there were complaints by some worker advocates that unscrupulous employers, particularly those in the underground economy, were filing "frivolous" appeals of LC decisions with the superior court in an effort to drag out litigation and hide assets so that workers would not be able to collect on judgments, even if ultimately successful on appeal. In response, AB 2509 (Steinberg) of 2000 added language to Labor Code section 98.2(b) that specified that "[w]henever an employer files an appeal pursuant to this section, the employer shall post an undertaking with the reviewing court in the amount of the decision, order, or award." AB 2899 Page 3 Despite the legislative history of AB 2509, in 2006 a California appellate court determined that the requirement of Labor Code section 98.2(b) was merely "directory" (and not "mandatory and jurisdictional.") Progressive Concrete Inc., v. Parker, 136 Cal. App. 4th 540, 548 (2006). In response, the Legislature passed AB 2772 (Labor Committee) in 2010 to clarify that the bond must be filed as a condition to an employer's filing of an appeal. No Bond Requirement for "Appeals" of BOFE Citations In addition to an employee filing a claim for wages through the wage claim adjudication process, the LC (operating through BOFE) may cite an employer for an alleged violation of the law. A person challenging a citation may request an informal hearing, at the conclusion of which the citation and any proposed penalties may be affirmed, modified or dismissed. If an employer wishes to challenge the decision of the LC, he or she may file a writ of mandate with the appropriate superior court. Unlike an appeal of an employee wage claim discussed above, there is no requirement that an employer filing a writ of mandate to overturn a LC citation must post a wage bond. Therefore, this bill would impose a similar wage bond requirement on the filing of such a writ of mandate. REGISTERED SUPPORT / OPPOSITION: Support California Rural Legal Assistance Foundation AB 2899 Page 4 Opposition None on file. Analysis Prepared by:Ben Ebbink / L. & E. / (916) 319-2091