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  








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          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.)








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          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  







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          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  







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            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  







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          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  







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          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







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           Related Pending Legislation  : None Known 

           Prior Legislation  : None Known 

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