BILL ANALYSIS
AB 1133
Page 1
GOVERNOR'S VETO
AB 1133 (Koretz)
As Amended August 25, 2003
2/3 vote
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|ASSEMBLY: |46-29|(May 29, 2003) |SENATE: |23-15|(September 10, |
| | | | | |2003) |
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|ASSEMBLY: |43-32|(September 11, | | | |
| | |2003) | | | |
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Original Committee Reference: L. & E.
SUMMARY : Imposes an automatic penalty equal to 100% of the
original judgment for every six months that employers do not pay
wage and hour judgments rendered against them.
The Senate amendments :
1)Change the penalty formula from a doubling of the amount of
the judgment every six months to a penalty equal to the
original amount of the judgment for every six-month period the
judgment remains unpaid.
2)Establish a "cap" to provide that the penalty will not be
applied more than four times.
3)Eliminate the attorney's fee provision of this bill.
4)Clarify that this bill applies to the entire part of the Labor
Code governing unpaid wages, not just one particular article.
5)Specify that any penalty monies remaining after collection
costs have been paid shall be distributed to the employees
entitled to payment under the judgment, in proportion to the
wages owed.
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EXISTING LAW authorizes:
1)An employee to file an administrative claim with the Labor
Commissioner (LC) or to bring a civil action against an
employer for the nonpayment of wages and penalties. An
employee who brings an action is entitled to recover costs and
attorneys' fees.
2)The LC to require an employer to deposit a bond where the
employer has failed to pay any judgment for the nonpayment of
wages for more than 10 days after the time to appeal the
judgment has expired.
3)An employee, where an employer has violated the law or failed
to pay a judgment twice within a 10-year period, to bring an
action for a temporary restraining order prohibiting the
employer from doing business in the state until the employer
deposits a bond to satisfy the unpaid judgment.
AS PASSED BY THE ASSEMBLY , this bill:
1)Declared that, if any judgment for nonpayment of wages or
penalties remains unpaid for six months after the time to
appeal the judgment has expired or any appeal has been
concluded, the amount of the judgment shall double.
2)Provided that the amount of the judgment is again doubled for
each additional six-month period for which the judgment
remains unpaid.
3)Required a court to award attorneys' fees and costs to the
employee or LC who enforces such a judgment.
FISCAL EFFECT : According to the Senate Committee on
Appropriations, negligible state costs.
COMMENTS : Supporters argue that this bill would hold employers
accountable who try to circumvent the law by not paying wage and
hour judgments lawfully entered against them. The sponsors of
this bill, numerous worker advocacy organizations, state that
there are many cases where employees go through the entire wage
claim adjudication process with the LC, win their judgment and
AB 1133
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are still unable to receive their unpaid wages or penalties
because the employer simply refuses to pay.
Since the amount of such judgments is generally not sufficient
to make collection by a collection agency profitable, workers
receive little, if any, further assistance in recovering their
owed wages or penalties.
Supporters state that this bill not only encourages employers to
pay their judgments and pay them on time, but also increases the
incentive for collection agencies to accept low-wage workers'
cases once the penalties begin to accrue. Supporters also point
out that the provisions of this bill do not trigger until six
months after the time to appeal a judgment has expired, or such
an appeal has been concluded, when there is no justification for
an employer to refuse to satisfy the judgment.
Opponents argue that this bill is gross overkill and would set a
new and very onerous precedent for employers. Opponents state
that wage judgments should only be subject to a reasonable
penalty or a set amount of interest. In addition, opponents
argue that once the LC has entered a judgment, it should be the
sole responsibility of the LC to enforce payment of the
judgment.
GOVERNOR'S VETO MESSAGE :
This bill provides that if a judgment for unpaid wages
or penalties remains unsatisfied for 6 months after
the judgment becomes final, a penalty equal to the
amount of the judgment is applied. This penalty is
then applied every 6 months the judgment remains
unsatisfied, up to a maximum of 4 times.
This bill is intended to encourage employers to
promptly satisfy judgments entered against them by the
Labor Commissioners Office. However, existing law
already provides that interest on judgments accrues at
a rate of 10 percent per annum on the principal amount
of a judgment, which remains unsatisfied.
I applaud the author for his efforts to ensure prompt
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payment of unpaid wages and any associated penalties.
While the current 10 percent per annum rate on a
judgment may not be a sufficient penalty, potentially
doubling a judgment 240 percent in a two-year period
is excessive. I encourage the Legislature to find a
more appropriate penalty scheme.
For these reasons, I am unable to sign this bill.
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091
FN: 0004231