BILL ANALYSIS
AB 2424
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Date of Hearing: April 21, 2010
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Sandre Swanson, Chair
AB 2424 (Niello) - As Introduced: February 19, 2010
SUBJECT : Payment of wages.
SUMMARY : Extends the time for payment of wages to discharged
employees from immediately to within 24 hours, as specified.
Specifically, this bill :
1 Provides that payment of wages upon discharge shall be made
within a reasonable time not exceeding 24 hours after
discharge, excluding weekends and holidays.
2)Specifies that payment may be made to mail to the employee's
most recent address or to an alternate address designated by
the employee in writing at the time of discharge, or by making
the payment available to the employee at a location specified
by the employer.
3)Specifies that the date payment is mailed or made available
constitutes the date of payment.
4)Eliminates provisions of current law related to oil drilling
employees that would be subsumed by these new requirements.
EXISTING LAW :
1 Provides that if an employer discharges an employee, the wages
earned and unpaid at the time of discharge are due and payable
immediately.
2)Authorizes an employer who lays off employees in specified
seasonal industries to pay final wages within a reasonable
time not exceeding 72 hours.
3)Provides that if an employee quits, final wages are due and
payable no more than 72 hours later (unless the employee has
given 72 hours notice in which case wages are due at the time
of quitting).
4)Provides that if an employer willfully fails to pay wages to
an employee who is discharged or who quits, the wages of the
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employee continue as a penalty from the date due until paid or
an action for recovery is commenced (not exceeding 30 days).
FISCAL EFFECT : Unknown
COMMENTS : Since 1919, the State of California has required all
employers to pay their employees immediately upon discharge.
The penalties for failure to do so have also been in law since
1919. Both of these provisions were subsequently codified with
the enactment of the Labor Code in 1937.
According to the author, with limited exception existing law
does not take into account the practicalities of preparing and
issuing final wages to an employee when a discharge occurs
during evenings, weekends, or holidays, in locations removed
from principal administrative offices, or when the need to
discharge an employee arises unexpectedly and the discharge must
be undertaken immediately. These include instances in which an
employer becomes aware of conduct that demands prompt attention
to prevent danger to the public or other employees.
The author contends that in these situations, while the employer
has acted responsibly, it is nonetheless exposed to penalties
for failing to pay final wages immediately even if those wages
are calculated and paid within one day. Moreover, the author
argues that the issues surrounding immediate payment of wages
have been further complicated by uncertainty over what types of
payments or benefits to employees are considered "wages."
Therefore, the author states that this bill will benefit
numerous California businesses where logistics or other
circumstances prohibit immediate payment at the time of
discharge. However, the proposal will also support the rights
of employees by providing a specific reasonable time period to
make certain the discharged employee receives timely payment of
final wages.
Opponents argue that since the employer is fully in control of
the timing of an employee's discharge, there is no reason that
the employer should not be able to pay the discharged employee
immediately. They contend that this law has worked well for
decades and there is no need to weaken it.
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Opponents argue that current law provides a clear rule that
reduces tension in the workplace by resolving the final payment
of wages quickly and efficiently. This bill would jeopardize
many of California's most vulnerable workers, who would have to
go longer without the wages they are owed and be at greater risk
of never being paid at all. This would result in an increase in
wage claims, many of which would never be recovered, and in a
greater number of abuses in the underground economy.
The Consumer Attorneys of California (CAOC) points out that
California law regarding immediate payment to employees dates
back to 1919 and was codified in 1937. CAOC argues that there
is strong public policy in California favoring the prompt
payment of final wages, as evidenced in Mamika v. Barca (1998)
68 Cal.App.4th 487, where the court stated:
"Public policy has long favored the full and prompt payment
of wages due an
employee?[W]ages are not ordinary debts?[B]ecause of the
economic position
of the average worker and, in particular, his dependence on
wages for the necessities
of life for himself and his family, it is essential to the
public welfare that he receive
his pay promptly."
CAOC concludes that a just-fired employee should not have to
spend a significant portion of his or her first unemployed day
trying to collect their earned wages. The employee should be
free to focus on getting a new job and filing for unemployment
insurance to minimize the hardship caused by the loss of a job.
PRIOR LEGISLATION :
SB 1283 (Harman) from 2008 would have allowed employers to make
available the wages due to a discharged employee six hours after
the start of the accounting unit's next regular workday if (1)
the employer's accounting unit is at the work site, and (2) the
accounting unit is not regularly scheduled to be operational.
SB 1283 also would have allowed employers to deliver the check
for wages due to a discharged employee 24 hours after the start
of the accounting unit's next regular workday if (1) the
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employer's accounting unit is located off the work site and (2)
the accounting unit is not regularly scheduled to be
operational. The bill specified that the check may be delivered
to the work site, the employer's local office, the discharged
employee's last-known mailing address.
SB 1283 failed passage in the Senate Committee on Labor and
Industrial Relations.
REGISTERED SUPPORT / OPPOSITION :
Support
Associated General Contractors
Association of California Water Agencies
California Association of Joint Powers Authorities
California Chamber of Commerce
California Employment Law Council
California Farm Bureau Federation
California Grocers Association
California Hospital Association
California Independent Grocers Association
California Restaurant Association
California Retailers Association
Department of Industrial Relations (sponsor)
Western Growers Association
Opposition
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Employment Lawyers Association
California Labor Federation, AFL-CIO
California Rural Legal Assistance Foundation
California Teamsters Public Affairs Council
Consumer Attorneys of California
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
United Transportation Union
UNITE-HERE!
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Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091