BILL ANALYSIS
AB 2187
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CONCURRENCE IN SENATE AMENDMENTS
AB 2187 (Arambula)
As Amended August 11, 2010
Majority vote
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|ASSEMBLY: |42-28|(May 6, 2010) |SENATE: |21-14|(August 24, |
| | | | | |2010) |
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Original Committee Reference: L. & E.
SUMMARY : Increases criminal penalties for willful failure to pay
wages.
The Senate amendments :
1)Adds an exemption if the employee's entitlement to unpaid wages
is disputed by the employer in a civil action or proceeding
with the Labor Commissioner (LC) unless a final judgment is
entered with respect to that dispute in favor of the employee.
2)Deletes the requirement that an employer or person, upon
conviction becoming final, to pay all reasonable costs of
prosecution to the entity that prosecutes. "Conviction" is
defined as a verdict of guilty or a plea of guilty or nolo
contendere.
3)Defines "willfully" as used in this bill to have the same
meaning as provided in Section 7 of the Penal Code.
EXISTING LAW establishes misdemeanor criminal penalties for
various violations of the Labor Code, including the willful
failure to pay wages due.
AS PASSED BY THE ASSEMBLY , this bill:
1 Established a misdemeanor penalty for an employer or person who
willfully fails to pay all wages due to an employee who has
been discharged or who has quit within 90 days of the date
wages are due.
2)Made 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.
AB 2187
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3)Required 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.
4)Required an employer or person, upon conviction becoming final,
to pay all reasonable costs of prosecution to the entity that
prosecutes. "Conviction" is defined as a verdict of guilty or
a plea of guilty or nolo contendere.
5)Made related legislative findings and declarations.
FISCAL EFFECT : According to the Senate Appropriations Committee,
pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS : This measure is sponsored by the California Rural
Legal Assistance Foundation (CRLAF), who argues that it 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.
CRLAF notes that various provisions of the Labor Code make it a
misdemeanor to fail to comply with wage payment laws. However,
CRLAF argues that none of these statutes: 1) impose any
additional criminal sanctions if an unscrupulous employer fails
to pay wages that are due within a reasonable period of time; 2)
impose a significant minimum fine for such misconduct; (3)
require restitution to the employee of all unpaid wages; or, 4)
require a guilty party to pay the reasonable costs of a
successful prosecution. In addition, CRLAF states that various
provisions of the California Constitution and the Penal Code
contain "victim's rights" restitutionary protections including a
mandatory "restitution fine" (for misdemeanor convictions,
ranging from not less than $100 to not more than $1,000) and
mandatory "full restitution" for an injured victim, but in both
instances a court has discretion not to assess any fine or not to
order full restitution if it finds that there are "compelling and
extraordinary" reasons to do so and states them on the record.
Therefore, CRLAF contends that this bill addresses each of the
four weaknesses identified in the Labor Code's provisions by: 1)
making it a misdemeanor to fail to pay wages due, within 90 days,
to an employee who quits or is discharged; 2) setting a minimum
fine of $1,000 and a maximum fine of $10,000 for this violation;
3) requiring, in addition to the fine, full restitution to each
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employee equal to the total amount of wages not paid.
Opponents, including the California Chamber of Commerce, 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. 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 argue 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.
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. The threat of criminal prosecution under this bill
could unfairly force an employer to drop an otherwise reasonable
defense against a civil action. Moreover, opponents express
concern 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. 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, since
existing law requires the employer to make the employee whole and
imposes stiff penalties of varying amounts, depending on the wage
dispute at issue, when the employer fails to pay wages due.
Moreover, current criminal laws outlaw theft, which permits
prosecution of ill-intentioned employers who steal money from
their employees.
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091
FN: 0005895