BILL ANALYSIS Ó SENATE JUDICIARY COMMITTEE Senator Hannah-Beth Jackson, Chair 2015-2016 Regular Session SB 1342 (Mendoza) Version: April 12, 2016 Hearing Date: April 26, 2016 Fiscal: No Urgency: No NR SUBJECT Wages: investigations: subpoenas DESCRIPTION This bill would specify that a legislative body of a city or county is authorized to delegate that body's authority to issue subpoenas to a county or city official or department head and may report noncompliance thereof to the judge of the superior court of the county in order to enforce local wage laws. This bill would also make related legislative findings. BACKGROUND Across the country, with California leading the way, cities and counties are passing their own minimum wage laws, often with significantly higher wages than currently exist at the state and federal level. In 2014, San Francisco voters overwhelmingly approved a ballot measure to gradually raise the city's minimum wage to $15 an hour by 2018. Last year the Los Angeles City Council voted to establish a city minimum wage that will reach $15 an hour by 2021, followed soon thereafter by a measure by Los Angeles County. San Jose adopted a city minimum wage in 2012 and smaller cities have recently done the same, including Oakland, Berkeley, Richmond, Sunnyvale, Emeryville, Mountain View, Santa Clara, and San Diego. Last month the Legislature, ensuring that California maintains the highest minimum wage in the country, approved a plan to raise the minimum wage of the entire state to $15 per hour over the next six years. However, delivering on the promise of higher wages rests largely SB 1342 (Mendoza) Page 2 of ? on the ability of cities, counties, and the state to put enforcement systems in place and fight the wage theft that low-wage workers often experience. Wage theft, generally, is when workers are not paid the wages to which they are legally entitled. This can occur when workers receive payment at a rate below the legal hourly minimum, when employees are not paid for off-the-clock work, are not properly paid overtime, or fail to get required rest and meal breaks, among other violations. Significant and extensive minimum wage violations have been documented around the country and in cities throughout California, as described by a recent report: Significant and extensive minimum wage violations have been documented around the country and in cities throughout California. An analysis of worker surveys conducted by the Census and Bureau of Labor Statistics estimates that in California, minimum wage violations occur in any given week in 11 to 12 percent of all the low-wage jobs in the state (Eastern Research Group 2014). While this estimate already represents a significant amount of wage theft, experience suggests that official government surveys undercount workers who are especially vulnerable to wage theft, such as those working off the books or who are undocumented. Other estimates come from surveys that use alternative sampling strategies much more likely to capture the full range of workers in the low-wage labor market. The best such study to date is a large representative survey of low-wage workers in Los Angeles in 2008, which found that 30 percent had been paid below the minimum wage during the previous week and 88 percent had at least one pay-related violation in the previous week. The amount of underpayment due to minimum wage violations assuming a full-year work schedule averaged $1,135 a year per worker, or 6.9 percent of earnings. Counting all pay-based violations, such as unpaid overtime and off-the-clock work, workers lost $2,070 per year, or 12.5 percent of earnings. Violations occurred across industries and occupations, with above-average rates of minimum wage violations in garment manufacturing, domestic service, building services, and department stores. (Bernhardt, Dietz, and Koonse, Enforcing City Minimum Wage Laws in California: Best Practices and City-State Partnerships, UCLA Center for Labor Research and Education and UC Berkeley Center for Labor Research and Education, Oct. 2015.) SB 1342 (Mendoza) Page 3 of ? Recovery of stolen wages requires that the employee either find a private lawyer to sue the employer, or more commonly, file a complaint with a government agency charged with enforcement of labor violations. However, because low-wage workers have limited access to private attorneys, private actions have failed to address wage theft on a large scale. This is largely because the relatively low value of the average complaint dramatically reduces profit for private attorneys, even when taking 40 percent of the recovery. In addition, the difficulty private attorneys face when collecting from employers jeopardizes their ability to recover their attorneys' fees and earn anything for their effort. Thus, public enforcement plays a central role in ensuring that workers receive the wages they are owed. This bill, sponsored by the Los Angeles County Board of Supervisors, seeks to ensure that cities and counties have the tools necessary to enforce wage laws by clarifying that cities and counties have the ability to delegate the authority to issue subpoenas to a county or city official or department head. CHANGES TO EXISTING LAW Existing law , the California Constitution, divides the state into cities and counties, and requires that the Legislature provide for the powers of cities and counties. (Cal. Const., art. XI, Secs. 1 and 2.) Existing law , the California Constitution, allows counties and cities to adopt a charter for their own governance, independent of the Legislative scheme. (Cal. Const., art. XI, Secs. 3-6.) Existing law provides for the general powers of counties and specifies that a board of supervisors may do and perform all other acts and things required by law, or which are necessary to the full discharge of the duties of the legislative authority of the county government. (Gov. Code Sec. 25200 et seq. and Gov. Code Sec. 25207.) Existing law authorizes the board of supervisors of any county to establish the office of the county hearing officer, and provides that the duties of the office are to conduct hearings for the county or any board, agency, commission, or committee of the county. (Gov. Code Sec. 27720.) Existing law provides that when a law or ordinance requires that SB 1342 (Mendoza) Page 4 of ? a hearing be held or that findings of fact or conclusions of law be made by any county board, agency, commission, or committee, the county hearing officer may be authorized, by ordinance or resolution, to: 1) conduct the hearing; 2) to issue subpoenas; 3) to receive evidence; 4) to administer oaths; 5) to rule on questions of law and the admissibility of evidence; and 6) to prepare a record of the proceedings. (Gov. Code Sec. 27721.) Existing law provides for the general powers of cities including the ability to pass ordinances not in conflict with the Constitution or laws of the state, and specifies that the legislative body may issue subpoenas requiring attendance of witnesses or production of books or other documents for evidence or testimony in any action or proceeding pending before it. (Gov. Code Secs. 37100 et seq., 37104.) Existing law provides that, in addition to other powers, a city may perform all acts necessary or proper to carry out its powers. (Gov. Code Sec. 37112.) This bill would specify that, in order to enforce local wage laws, a legislative body of a city or county may delegate to a county or city official or department head its authority to issue subpoenas and to report noncompliance thereof to the judge of the superior court of the county. This bill would provide that the Legislature finds and declares that the provision above, does not constitute a change in, but is declaratory of, existing law. This bill would make various Legislative findings and declarations including: statistics related to wage theft; clarifying that the authority to delegate to local officials the ability to issue subpoenas exists under current law; and encouraging cities and counties to develop and enact specific measures to target and remedy wage theft. COMMENT 1.Stated need for the bill According to the author: Currently, well over a dozen cities and counties have passed SB 1342 (Mendoza) Page 5 of ? minimum wage ordinances going beyond the State-mandated $10 an hour. In many cases however, employers do not obey these laws. In Los Angeles County alone, workers are denied over $26 million a week in earned wages and have no local enforcement mechanism to assist them. No coherent multilevel approach exists that brings the state, counties, and cities together to work in concert to protect workers from these predatory practices. This bill would amend the code to specify that the board of supervisors of a county, or the legislative body of a city, may delegate its administrative subpoena authority to a county or city official or department head to investigate allegations of wage theft. 2.Ability of cities and counties to delegate the authority to issue subpoenas The California Constitution establishes that cities are instruments of local government, and counties are subdivisions of the state. (Cal. Const., art. XI, Secs. 1 and 2.) The Government Code then fleshes out their respective powers and responsibilities. Specifically, the Code provides for the general powers of counties and specifies that a board of supervisors may perform all other acts "which are necessary to the full discharge of the duties of the legislative authority of the county government." (Gov. Code Sec. 25207.) With regard to counties, the Code expressly allows counties to establish the office of a county hearing officer to conduct hearings for the county or any board, agency, commission, or committee of the county, and allows the hearing officer to issue subpoenas. (Gov. Code Secs. 27720 and 27721.) The general powers of cities are broader than those of counties, and include the ability to pass any "ordinances not in conflict with the Constitution or laws of the state," and the ability to "perform all acts necessary or proper to carry out its powers." (Gov. Code Secs. 37100 and 37112.) Related to this bill, under existing law, cities are specifically given the authority to "issue subpoenas requiring attendance of witnesses or production of books or other documents for evidence or testimony in any action or proceeding pending before it." (Gov. Code Sec. 37104.) In addition to the general powers of cities and counties SB 1342 (Mendoza) Page 6 of ? provided in the Government Code, the California Constitution allows for cities and counties to elect an alternative government structure by adopting a charter for their own governance. (Cal. Const., art. XI, Secs. 3-6.) Currently, 14 out of 58 California counties, and 121 out of 482 cities have adopted a charter. Charter cities and counties have the ability to amend their charters to expressly address the delegating of the subpoena power for the enforcement of wage theft. San Francisco, for example, amended its charter to create the Office of Labor Standards Enforcement and specifically granted the Labor Standards Enforcement Officer the authority to subpoena the production of books, papers, records or other items relevant to investigations under the Office's jurisdiction. (See San Francisco Charter Sec. 2A.23.) The courts have routinely upheld the authority of cities and counties to delegate some of their authority to a board, office, or commission in furtherance of carrying out the duties of the legislative body. In Dibb v. County of San Diego (1994) 8 Cal. 4th 1200, the California Supreme Court held that "the purpose of allowing counties to adopt charters was to ensure 'home rule' or 'the right of the people of a charter county to create their own local government and define its powers within the limits set out by the Constitution. Construing the constitutional provisions in light of that purpose, we conclude the charter county of San Diego has constitutional authority [ ? ] to confer the power to issue subpoenas on [a citizen review board]." Accordingly, this bill is arguably not necessary to give the sponsor, Los Angeles County the ability to delegate the authority to issue subpoenas to an official or department head. However, given California's recent approval of a state-wide $15 minimum wage, it is important that all cities and counties understand their ability to create boards, commissions, and offices with true wage enforcement authority. By specifically including in the Government Code the ability of counties and cities to delegate their authority to issue subpoenas, this bill will arguably help ensure that Californians are paid the wages they have earned. 3.Compelling compliance with subpoenas This bill would authorize a city or county official, or department head, who had issued a subpoena seeking to enforce SB 1342 (Mendoza) Page 7 of ? local wage laws, to report noncompliance with that subpoena to the superior court. In most other circumstances where individuals, agencies, or departments are expressly authorized to report noncompliance to the superior court, the Code outlines the next steps for enforcement. For example, when a person does not comply with a subpoena issued by the legislative body of a city, the mayor is required to report the noncompliance to the superior court, and the superior court is required to "issue an attachment directed to the sheriff of the county where the witness was required to appear, commanding him to attach the person, and forthwith bring him before the judge." (See Gov. Code Secs. 37104-37109.) Or, when a person refuses to comply with a subpoena issued in relation to an investigation by the Commission on Judicial Performance, the Commission may petition the court for an order compelling the person to produce the writings or things required by the subpoena. (See Gov. Code Sec. 68572). Similar processes, whereby agencies, departments and offices enforce compliance with subpoenas by petitioning the court for an order to compel. (See e.g., Gov. Code Sec. 11187, authorizing state departments to petition the court for an order to compel; Gov. Code Sec. 12930, authorizing the Department of Fair Employment and Housing to petition the superior court to compel the appearance and testimony of witnesses.) Staff notes that the authority under this bill to report noncompliance to the superior court does not, on its own: 1) ensure that the non-compliance is reported; or 2) ensure that the court take any action if the non-compliance is, in fact, reported. While the ability to petition the court for an order to compel is generally available, if the intent of the bill is to create strong wage theft enforcement mechanisms, the author should consider amending the bill to mandate subsequent action on the part of the city, county, or court in the event that a subpoena is not complied with. Support : None Known Opposition : None Known HISTORY Source : Los Angeles County Board of Supervisors SB 1342 (Mendoza) Page 8 of ? Related Pending Legislation : None Known Prior Legislation : None Known **************