BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 796|
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UNFINISHED BUSINESS
Bill No: SB 796
Author: Dunn (D)
Amended: 9/2/03
Vote: 21
SENATE LABOR & IND. RELATIONS COMMITTEE : 5-3, 4/9/03
AYES: Alarcon, Dunn, Figueroa, Kuehl, Romero
NOES: Oller, Margett, McClintock
SENATE JUDICIARY COMMITTEE : 4-2, 4/29/03
AYES: Escutia, Cedillo, Kuehl, Sher
NOES: Morrow, Ackerman
NO VOTE RECORDED: Ducheny
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SENATE FLOOR : 21-14, 5/29/03
AYES: Alarcon, Alpert, Bowen, Burton, Cedillo, Chesbro,
Ducheny, Dunn, Escutia, Figueroa, Karnette, Kuehl,
Murray, Ortiz, Perata, Romero, Sher, Soto, Speier,
Torlakson, Vincent
NOES: Aanestad, Ackerman, Ashburn, Battin, Brulte, Denham,
Hollingsworth, Johnson, Knight, Margett, McClintock,
McPherson, Oller, Poochigian
NO VOTE RECORDED: Florez, Machado, Morrow, Scott,
Vasconcellos
SUBJECT : Employment
SOURCE : California Labor Federation, AFL-CIO
California Rural Legal Assistance Foundation,
Inc.
CONTINUED
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DIGEST : This bill allows employees to sue their
employers for civil penalties for employment law
violations. This bill is intended to augment the
enforcement abilities of the Labor Commissioner by creating
an alternative "private attorney general" system for labor
law enforcement.
Assembly Amendments (1) provide that the bill will not
affect the exclusive remedy provided by workers'
compensation provisions of current law, (2) clarify that no
penalty is established for any failure to act by the Labor
and Workplace Development Agency, as specified, and (3)
make clarifying changes.
ANALYSIS : Existing law authorizes the State Labor and
Workforce Development Agency (LWDA) (comprised of the DIR,
the Employment Development Department, the Agricultural
Labor Relations Board, and the Workforce Investment Board)
to assess and collect civil penalties for violations of the
Labor Code, where specified.
Existing law authorizes the Attorney General and other
public prosecutors to pursue misdemeanor charges against
violators of specified provisions of the code.
Existing law authorizes an individual employee to file a
claim with the Labor Commissioner alleging that his or her
employer has violated specified provisions of the code, and
to sue the employer directly for damages, reinstatement,
and other appropriate relief if the Commissioner declines
to bring an action based on the employee's complaint.
Existing law further provides that any person acting for
itself, its members, or the general public, may sue to
enjoin any unlawful, unfair, or fraudulent business act or
practice, and to recover restitution and disgorgement of
any profits from the unlawful activity.
This bill is entitled the "Labor Code Private Attorneys
General Act of 2004", and establishes an alternative
"private attorney general" system for labor law enforcement
that allows employees to pursue civil penalties for
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employment law violations. Specifically, this bill enacts
the "Labor Code Private Attorneys General Act of 2004"
which:
1.Establishes a civil penalty where one is not specifically
provided under the Labor Code of $100 for each aggrieved
employee per pay period for an initial violation, and
$200 for each aggrieved employees per pay period for
subsequent violations. The penalty will be $500 per
violation for a violator who is not an employer.
2.Specifies that where the Labor and Workforce Development
Agency (LWDA) or any of its subdivisions has discretion
to assess civil penalties, a court may exercise the same
discretion with respect to the civil penalties
established by this bill. Moreover, the civil penalties
do not apply if the alleged violation is a failure to act
by the LWDA or any of its subdivisions.
3.Authorizes aggrieved employees to sue to recover civil
penalties under the Labor Code in an action brought on
behalf of himself or herself and other current or former
employees against whom one or more of the alleged
violations was committed. However, no private action may
be maintained where the LWDA or any of its subdivisions
initiates proceedings against the alleged violator on the
same facts and theories and under the same section or
sections of the Labor Code.
4.Defines an "aggrieved employee" as any person who was
employed by the alleged violator and against whom one or
more of the alleged violations was committed.
5.Provides that civil penalties recovered against a person
that employs one or more employees shall be distributed
as follows: 50 percent to the General Fund (GF), 25
percent to LWDA for employer and employee education; and,
25 percent to the aggrieved employees. Civil penalties
recovered against persons that do not employ one or more
employees are to be divided evenly between GF and LWDA.
6.Provides for the award of reasonable attorney's fees and
costs to an aggrieved employee who prevails in such an
action. Provides that this bill is not intended to
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affect the exclusive remedy provided by workers'
compensation provisions of existing law.
Background
California's Labor Code is enforced by LWDA and its various
boards and departments, which may assess and collect civil
penalties for specified violations of the code. Some Labor
Code sections also provide for criminal sanctions, which
may be obtained through actions by the Attorney General and
other public prosecutors.
In 2001, the Assembly Labor and Employment Committee held
hearings about the effectiveness and efficiency of the
enforcement of wage and hour laws by the State Department
of Industrial Relations (DIR), one of four subdivisions of
the LWDA. The committee reported that in fiscal year
2001-2002, the Legislature appropriated over $42 million to
the State Labor Commission for the enforcement of over 300
laws under its jurisdiction. The DIR's authorized staff
numbered over 460, making it the largest state labor law
enforcement organization in the country.
Nevertheless, evidence received by the Senate Judiciary
Committee indicated that the DIR was failing to effectively
enforce labor law violations. Estimates of the size
California's "underground economy" -- businesses operating
outside the state's tax and licensing requirements --
ranged from 60 to 140 billion dollars a year, representing
a tax loss to the state of three to six billion dollars
annually. Further, a U.S. Department of Labor study of the
garment industry in Los Angeles, which employs over 100,000
workers, estimated the existence of over 33,000 serious and
ongoing wage violations by the city's garment industry
employers, but the DIR was currently issuing fewer than 100
wage citations per year for all industries throughout the
state.
As a result of these hearings, the Legislature enacted AB
2985 (Assembly Labor and Employment Committee), Chapter
662, Statutes of 2002, requiring the LWDA to contract with
an independent research organization to study the
enforcement of wage and hour laws, and to identify state
and federal resources that may be utilized to enhance
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enforcement. The completed study is to be submitted to the
Legislature by December 31, 2003.
This bill would propose to augment the LWDA's civil
enforcement efforts by allowing employees to sue employers
for civil penalties for labor law violations, and to
collect attorneys' fees and a portion of the penalties upon
prevailing in these actions, as specified.
Prior legislation
AB 2985 (Assembly Labor and Employment Committee), Chapter
662, Statutes of 2002, requires Labor and Workforce
Development Agency to contract with independent research
organization to study most effective ways to enforce wage
and hour laws, and to identify all available state and
federal resources available for enforcement; completed
study to be submitted to Legislature by December 31, 2003.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Assembly Appropriations Committee,
potential increased penalty revenue to the GF and to LWDA.
SUPPORT : (Verified 9/4/03)
California Labor Federation, AFL-CIO (co-source)
California Rural Legal Assistance Foundation,
Inc.(co-source)
American Federation of State, County and Municipal
Employees (AFSCME)
California Applicants Attorneys Association
California Conference Board of the Amalgamated Transit
Union
California Council of Machinists
California Independent Public Employees Legislative Council
California State Pipe Trades Council
California State Association of Electrical Workers
California Teamsters
Engineers and Scientists of California, Local 20
Hotel Employees, Restaurant Employees International Union
Peace Officers Research Association of California
Professional and Technical Engineers, Local 21
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Protection and Advocacy, Inc.
Region 8 States Council of the United Food and Commercial
Workers
Western States Council of Sheet Metal Workers
OPPOSITION : (Verified 9/4/03)
Associated Builders and Contractors of California
Associated General Contractors of California
California Apartment Association
California Chamber of Commerce
California Employment Law Council
California Landscape Contractors Association
California Manufacturers and Technology Association
Civil Justice Association of California (CJAC)
Construction Employers' Association
Motion Picture Association of America
Orange County Business Council
ARGUMENTS IN SUPPORT : Proponents, the California Labor
Federation asserts that in the last decade state government
labor law enforcement functions have failed to keep pace
with the growth of the economy and the workforce.
Additionally they note that, resources available to county
district attorneys, for prosecution of Labor Code
violations as crimes, are similarly lacking.
Proponents contend that the states current inability to
enforce labor laws effectively is due to inadequate
staffing and to the continued growth of the underground
economy. This inability coupled with the states severe
budgetary shortfall requires a creative solution that will
help the state crack down on labor law violators.
The California Rural Legal Assistance Foundation cites the
resurgence of violations of Labor Code prohibitions against
the "company store," as an example of the need for this
bill. This occurs either when the employee is required to
cash his check at a store owned by his employer and the
employer charges a fee, or where the employer coerces the
employee to purchase goods at that store. Currently,
violations of these code sections are misdemeanors but no
civil penalty is attached. Advocates are unaware of any
misdemeanor prosecution having been undertaken in relation
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to these code sections.
ARGUMENTS IN OPPOSITION : Opponents contend that this
bill tips the balance of Labor Law protection in
disproportionate favor to the employee to the detriment of
already overburdened employers. Opponents cite the fact
that employees are entitled to attorneys' fees and costs if
they prevail in their actions under this bill, yet the bill
fails to provide similar attorneys fees and costs for
prevailing employers. Additionally, opponents cite the
fact that there are no requirements imposed upon employees
prior to filing civil action such as preliminary claim
filing with the Labor Commissioner. Furthermore, opponents
complain that aggrieved employees may file on behalf of a
class, but are not required to fulfill class certification
requirements.
The California Manufacturers and Technology Association
(CMTA) asserts that California has a formal administrative
procedure to handle Labor Code violations that is both
economical and efficient. According to the CMTA, in many
instances the amount in dispute is so small that it would
not warrant an employer going to court because the cost of
legal representation would be so high. Finally, the CMTA
alleges that, since there is no requirement for the
employee to exhaust the administrative procedure or even
file with the Labor Commissioner the bill is an "invitation
for bounty hunting attorneys to aggressively pursue these
cases."
NC:sl 9/10/03 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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