BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2187|
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THIRD READING
Bill No: AB 2187
Author: Arambula (I), et al
Amended: 8/11/10 in Assembly
Vote: 21
SENATE LAB. & INDUS. RELATIONS COMMITTEE : 4-1, 6/23/10
AYES: DeSaulnier, Ducheny, Leno, Yee
NOES: Hollingsworth
NO VOTE RECORDED: Wyland
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 42-28, 5/6/10 - See last page for vote
SUBJECT : Employment: payment of wages
SOURCE : California Rural Legal Assistance Foundation
DIGEST : This bill increases criminal penalties for
employers who willfully fail to pay wages due to an
employee who resigns or is discharged.
ANALYSIS : Existing law establishes misdemeanor criminal
penalties for various violations of the Labor Code,
including the willful failure to pay wages due. Under
existing law:
1. Termination . If an employer terminates an employee or
lays him/her off with no specific return date within the
normal pay period, all wages earned and unpaid are due
CONTINUED
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and payable immediately.
2. Voluntary quit and provide more than 72 hours' notice .
All wages and accrued vacation earned but unpaid for an
employee who quits with more than 72 hours' notice to
his/her employer are due and payable on the last day of
work.
3. Voluntary quit and provide less than 72 hours' notice .
All wages and accrued vacation earned but unpaid for an
employee who quits with less than 72 hours' notice to
his/her employer are due and payable not later than 72
hours after notice is given. The employee is entitled
to receive his/her final wage payment by mail if he/she
so requests and designates a mailing address. The date
of the mailing is considered the date of payment for
purposes of the 72 hour requirements.
Under existing law, an aggrieved employee has the right to
restitution for unpaid wages. Existing law also makes it a
misdemeanor, in addition to imposing civil penalties, for a
person or employer who, having the ability to pay,
willfully refuses to pay wages due to a current employee,
an employee who has resigned, or an employee who has been
discharged.
This bill increases criminal penalties for an employer who
willfully fails to pay wages due to an employee who resigns
or is discharged. Specifically, this bill:
1. Makes the aforementioned misdemeanor punishable by a
fine of not less than $1,000 and not more than $10,000,
or by imprisonment in a county jail for not more than
six months, or both.
2. Establishes a misdemeanor penalty for an employer or
person who willfully fails to pay within 90 days of the
date wages are due, all wages due to an employee who has
been discharged or who has quit.
3. Provides for an exemption if in cases that are disputed
by the employer in a civil action or proceeding before
the Labor Commission, as specified.
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4. Requires an employer found guilty of the aforementioned
misdemeanor to pay, in addition to any criminal fines,
restitution to the aggrieved employee in an amount equal
to the total amount of unpaid wages.
5. Makes related legislative findings and declarations.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/11/10)
California Rural Legal Assistance Foundation (source)
California Conference Board of the Amalgamated Transit
Union
California Conference of Machinists
California Labor Federation
California Nurses Association/National Nurses Organizing
Committee
California Teamsters Public Affairs Council
Central California Legal Services, Inc.
Engineers and Scientists of California, IFPTE Local 20
International Longshore and Warehouse Union
Jockeys' Guild
Professional and Technical Engineers, IFPTE Local 21
United Food and Commercial Workers Region 8 States Council
UNITE-HERE!
OPPOSITION : (Verified 8/11/10)
Associated General Contractors
Automotive Aftermarket Industry Association
California Automotive Wholesalers' Association
California Chamber of Commerce
California Chapter of the American Fence Association
California Construction and Industrial Materials
Association
California Employment Law Council
California Farm Bureau Federation
California Fence Contractors' Association
California Framing Contractors Association
California Grocers Association
California Hospital Association
California Independent Grocers Association
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California Restaurant Association
California Retailers Association
Construction Employers' Association
Engineering Contractors' Association
Flasher/Barricade Association
Independent Waste Oil Collectors and Transporters
Association
Marin Builders' Association
Motion Picture Association of America
Western Electrical Contractors Association
Western Growers Association
ARGUMENTS IN SUPPORT : According to the author's office,
there is substantial evidence of widespread theft of wages
in California, particularly in the underground economy.
Proponents argue that recent studies (UCLA, " Wage Theft and
Workplace Violations in Los Angeles ," 2010 and Ford
Foundation, " Broken Laws, Unprotected Workers ," 2009) have
found that more than one quarter of all workers surveyed
were not being paid the minimum wage. Unfortunately,
proponents argue, in spite of these numbers, in 2008, the
Division of Labor Standards Enforcement cited just 265
employers in the entire state for violations of minimum
wage or overtime laws. And in 2009, only 216 employers in
the entire state of California were cited for violating
minimum wage or overtime pay laws assessing a total of
$650,550 in penalties for these violations, of which only
$230,154 was collected.
Proponents argue that in addition to inadequate
enforcement, the penalties for violations are insufficient
to create a deterrent. Proponents also argue that in our
current economy, where workers are desperate to keep their
jobs, many employers assume there is little risk of getting
caught and little to lose if they do. Proponents believe
that without a strong economic disincentive, wage theft
will only expand and workers will continue to be cheated
out of the wages they have earned. According to
proponents, this bill closes a loophole in California
criminal law that allows an unscrupulous employer to refuse
to pay wages that are due by making it a crime for a person
who "having the ability to pay, willfully fails to pay all
wages due" to an employee who has been discharged or has
quit within 90 days of the date that those wages became
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due.
In addition, proponents maintain that the language in this
bill is almost identical to language contained in Labor
Code Section 216, which the California Supreme Court found
to be constitutional in 1948 (In re Trombley , 1948, 31 Cal
2d 801). Proponents and the author's office believe that
this bill will appropriately strengthen the hands of
prosecutors who take on theft of wages cases in the future,
and will make certain that restitution of all unpaid wages
to aggrieved employees is central to these prosecutions.
ARGUMENTS IN OPPOSITION : Opponents argue that this bill
could make into criminals employers with legitimate
disputes over wage claims. They contend that the term
"willfully fails" is vague and undefined, so it could be
construed to apply to wage disputes that are often not
resolved until long after 90 days. Opponents argue that,
for example, if an employer and employee disagree over the
amount of wages due, a Labor Commissioner determination
could take longer than 90 days.
Opponents also state that this bill could also be construed
to criminalize almost any wage-based lawsuit, such as
overtime and meal and rest period class actions, that might
affect whether an employee was paid "all wages due" at the
end of employment. According to opponents, these lawsuits
have statutes of limitation from one to three or more years
and could also be pending in the courts for years in
appeals. Opponents maintain that the threat of criminal
prosecution under this bill could unfairly force an
employer to drop an otherwise reasonable defense against a
civil action.
Furthermore, opponents are concerned that jail time and
fines could be imposed against individual employees who
were following the directions of the employer since the
employer's "agents" and "employees" are subject to
liability under this bill. They argue that this might
include all the employees in the payroll department and all
the way up the supervisorial chain. Finally, opponents
question the necessity of this bill arguing that existing
law already requires the employer to make the employee
whole and imposes stiff penalties of varying amounts,
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depending on the wage dispute at issue, when the employer
fails to pay wages due.
ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Beall, Blumenfield, Bradford,
Brownley, Caballero, Charles Calderon, Carter, Chesbro,
Coto, Davis, De Leon, Eng, Evans, Feuer, Fong, Fuentes,
Furutani, Hall, Hayashi, Hernandez, Hill, Huffman, Jones,
Lieu, Bonnie Lowenthal, Ma, Monning, Nava, Portantino,
Ruskin, Salas, Saldana, Skinner, Solorio, Swanson,
Torlakson, Torres, Torrico, Yamada, John A. Perez
NOES: Adams, Anderson, Bill Berryhill, Tom Berryhill,
Blakeslee, Conway, Cook, DeVore, Emmerson, Fletcher,
Fuller, Gaines, Garrick, Hagman, Harkey, Jeffries,
Knight, Logue, Miller, Nestande, Niello, Nielsen, Norby,
Silva, Smyth, Audra Strickland, Tran, Villines
NO VOTE RECORDED: Bass, Block, Buchanan, De La Torre,
Galgiani, Gilmore, Huber, Mendoza, V. Manuel Perez,
Vacancy
PQ:do 8/12/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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