BILL ANALYSIS
AB 2772
Page 1
Date of Hearing: May 5, 2010
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Sandre Swanson, Chair
AB 2772 (Labor Committee) - As Amended: April 8, 2010
SUBJECT : Labor Commissioner: appeals.
SUMMARY : Clarifies that an employer wishing to appeal a Labor
Commissioner (LC) decision with the superior court must first
post a bond in the amount of the judgment rendered in the
administrative hearing.
EXISTING LAW :
1 Authorizes the LC to investigate employee complaints and hold
administrative hearings to decide disputes over unpaid wages
and other related issues between employers and employees.
2)Permits a party to appeal an order, decision or award of the
LC within ten days by filing an appeal to the superior court,
where the appeal will be heard de novo.
3)Provides that whenever an employer files an appeal with the
superior court, the employer shall post a bond with the court
in the amount of the judgment rendered in the administrative
hearing.
FISCAL EFFECT : This bill is currently keyed non-fiscal.
COMMENTS : This bill is sponsored by the California Rural Legal
Assistance Foundation (CRLAF) and is intended to restore the
original intent of legislation enacted in 2000 related to
employer appeals of LC administrative decisions.
Brief Background on Labor Code Section 98.2 and AB 2509
Existing law authorizes employees (in lieu of filing a civil
proceeding) to file an administrative claim for unpaid wages or
similar damages with the LC. This is an administrative
adjudicatory process often referred to as the "Berman hearing"
process.
Under current law, a losing party may appeal a LC decision to
the superior court. The appeal is heard by the superior court
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on a "de novo" basis, meaning the appeal is heard "anew" as if
the original hearing had not taken place.
Prior to 2000, there were complaints by some worker advocates
that unscrupulous employers, particularly those in the
underground economy, were filing "frivolous" appeals of LC
decisions with the superior court in an effort to drag out
litigation and hide assets so that workers would not be able to
collect on judgments, even if ultimately successful on appeal.
In response, AB 2509 (Steinberg) of 2000 added the current
language to Labor Code section 98.2(b) that specifies that
"[w]henever an employer files an appeal pursuant to this
section, the employer shall post an undertaking with the
reviewing court in the amount of the decision, order, or award."
The Assembly floor analysis for AB 2509 (for the vote on
concurrence in Senate amendments, just preceding the final vote
on the bill) stated the following:
"The remaining provisions include those relating to: ....
requiring an undertaking
prior to an appeal of a final wage order ...." (Emphasis
supplied.)
The Progressive Concrete Decision
Despite the legislative history of AB 2509, in 2006 a California
appellate court determined that the requirement of Labor Code
section 98.2(b) is merely "directory" (and not "mandatory and
jurisdictional.") Progressive Concrete Inc., v. Parker, 136 Cal.
App. 4th 540, 548 (2006).
As a practical matter, this means that when an employer fails to
post the required bond, a court may not simply dismiss the
appeal, but instead must first issue an order directing the
employer to post the bond. This also means that an employee
must generally retain counsel to file a motion for such an
order. If the employer disobeys the court order by failing to
post the bond, then the court may dismiss the appeal.
The court in Progressive Concrete reasoned that a "promptly
issued trial court order requiring an appealing employer to post
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the undertaking by a certain date would have substantially the
same effect and thereby accomplish the same legislative purpose"
as permitting the court simply to dismiss an appeal when no bond
is posted. Id. at 548.
ARGUMENTS IN SUPPORT :
The sponsor of this bill, CRLAF, states that it is intended to
clarify that that whenever an employer files an appeal de novo
of a LC's adverse Order, Decision or Award (ODA), the employer
must first post an undertaking with the reviewing court in the
full amount of that ODA.
CRLAF argues that the Progressive Concrete decision - which is
binding on superior courts, state and local agencies, employees,
and employers until contradicted by another appellate court or
the California Supreme Court - is plainly inconsistent with the
clear purpose behind enactment of Section 98.2(b) as part of AB
2509 in 2000, which was to ensure that there are sufficient
funds available to satisfy a superior court judgment that
upholds the original ODA in favor of the employee.
CRLAF contends that the effect of the appellate court's holding
is that, unless a superior court issues an order sua sponte to
post the bond (which the decision does not require), an employee
would have the burden of filing a motion herself asking the
court to order the posting of the bond. Although the case seems
say that in such instances, a court would be required to order
posting of the bond, the decision imposes additional expenses
and delays on a plaintiff that were never contemplated by the
sponsors of AB 2509. And, it also means, that if a plaintiff
doesn't make such a motion (and the court doesn't order it
itself), then an unscrupulous employer could lose on appeal but
leave the employee with a judgment the employer never intended
to pay (and has not posted a bond to cover). This is precisely
the reason why Section 98.2(b) was included in AB 2509: it was
in response to unscrupulous employers who were avoiding paying
off final LC wage judgments by filing unwarranted, dilatory, and
expensive court appeals as a strategy to defeat workers' valid
wage claims.
Bet Tzedek Legal Services points to one of their recent cases as
illustrating the problem raised by the Progressive Concrete
decision as follows:
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"In September 2007, the LC awarded a Bet Tzedek client over
$80,000 in unpaid wages and penalties for years of work at
rates drastically below the minimum wage. The defendant
employer immediately appealed the administrative decision
to the Superior Court, but failed to post the required
bond. In order to seek dismissal of the appeal under the
process required by Progressive Concrete, Bet Tzedek filed
a motion for an order directing the defendant employer to
post the bond. The court granted the motion and set a date
by which the employer was required to post the bond. The
employer failed to do so, but repeatedly appeared in court
to request more time. Ultimately, the court set three
successive deadlines, requiring three further court
hearings, for the employer to post the bond. When the
employer missed the final deadline, the court dismissed the
appeal and entered judgment in the amount of the LC award.
By the time the appeal was dismissed in March 2008, more
than six months had passed from the time of the LC award,
during which the defendant employer transferred assets and
shut down operations of its business."
REGISTERED SUPPORT / OPPOSITION :
Support
Bet Tzedek Legal Services
California Labor Federation, AFL-CIO
California Rural Legal Assistance Foundation (sponsor)
Opposition
None on file.
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091