BILL ANALYSIS
Senate Committee on Labor and Industrial Relations
Mark DeSaulnier, Chair
Date of Hearing: April 14, 2010 2009-2010 Regular
Session
Consultant: Alma Perez Fiscal:Yes
Urgency: No
Bill No: SB 903
Author: Wright
Version: As amended April 7, 2010
SUBJECT
Penalty collections: limitations.
KEY ISSUE
Should the Legislature conform the collection period for
Division of Labor Standards Enforcement (DLSE) related debts to
that which exists for Division of Occupational Safety and Health
(DOSH) related debts?
PURPOSE
To extend the time period for collection actions that can be
brought by the DLSE from one year to three years.
ANALYSIS
Under existing law, the Division of Labor Standards Enforcement,
within the Department of Industrial Relations, is responsible
for vigorously enforcing minimum labor standards in order to
ensure employees are not required or permitted to work under
substandard unlawful conditions, and to protect employers who
comply with the law from those who attempt to gain competitive
advantage at the expense of their workers by failing to comply
with minimum labor standards.
Existing law provides that an action by the DLSE for collection
of a statutory penalty or fee must be commenced within one year
from the date the penalty or fee became final. (Code of Civil
Procedure 340).
Existing law provides that, notwithstanding Section 340 of the
Code of Civil Procedure, an action by the Division of
Occupational Safety and Health to collect any civil penalty,
fee, or penalty fee under the Occupational Safety and Health
division must be commenced within three years from the date the
penalty or fee became final.
This Bill would extend the period within which the DLSE may
commence an action to collect a civil penalty, fee, or penalty
fee from one year to three years from the date the penalty or
fee became final. In addition, this bill would specify that
this provision applies only to penalty assessments or fees that
became final on or after the effective date of this bill.
COMMENTS
1. Need for this bill?
In August 2008, the State Controller published the results of
an audit of the Department of Industrial Relations on
"Accounting and Administrative Processes and Procedures for
Collection of Debt Due the State." The audit found that:
DIR was able to collect only a fraction of the fines
that were imposed;
DIR is circumventing state control requirements by not
establishing accounts receivable in its formal accounting
records;
DIR's internal control over collection is weak because
its collection duties are not clearly defined and
adequately segregated;
Accuracy and completeness of DIR's accounts receivable
balance resulting from DOSH-imposed fines are questionable.
One of the key recommendations made by the State Controller in
the audit was that DIR may wish to consider pursuing a
legislative change extending from one year to three years the
Hearing Date: April 14, 2010 SB 903
Consultant: Alma Perez Page 2
Senate Committee on Labor and Industrial Relations
statute of limitations period for filing a judgment on
DLSE-imposed fines. The report notes that for DOSH-imposed
fines, the statute of limitations period is already three
years.
This bill would implement the recommendation made by the State
Controller and would extend the statute of limitations period
for filing an action to collect DLSE-imposed civil penalties
from one year to three years. If enacted, this bill would
conform the statute of limitations period for DLSE penalty
collection actions to that which already exists for DOSH-
imposed civil penalty collection activity. This bill would
give the DLSE more time to collect penalties and get workers
the wages they are owed.
2. Proponent Arguments :
According to the author, this bill would increase the statute
of limitations for the Division of Labor Standards Enforcement
to bring actions to recover penalties due from employers who
violate wage and hour laws from one year to three years.
Proponents believe that the current one year period for the
commencement of actions to recover penalties is simply too
short, especially in light of the current budget situation in
which many state employees are working less than full-time due
to furloughs.
Proponents argue that enforcement of basic rights has long
been inadequate, and unfortunately, coming forward almost
certainly results in employer retaliation so workers often
have to choose between keeping a job and speaking out for what
they deserve. In addition, proponents argue that the
likelihood of an employer getting caught is so slim and the
penalty so minor that there is no effective deterrent.
According to proponents, when employers are cited, penalties
are routinely negotiated down. In 2008, DLSE collected
approximately 20 cents on the dollar for all civil penalties
assessed for wage and hour law violations. Proponents argue
that a 20% recovery rate is too low to constitute a meaningful
deterrent against future misconduct. Proponents also believe
that in an era of shrinking budgets and staff furloughs, the
Hearing Date: April 14, 2010 SB 903
Consultant: Alma Perez Page 3
Senate Committee on Labor and Industrial Relations
Legislature should take all reasonable steps to maximize the
full collection of all debts. Proponents believe that this
bill will strengthen enforcement efforts and significantly
improve DLSE's collections of debts due to the state.
3. Opponent Arguments :
None received to date.
4. Prior Legislation :
AB 2016 (Conroy): Chapter 998, Statutes of 1993
AB 2016 required that an action to collect any civil penalty,
fee, or penalty fee under provision regulating safety in
employment must be commenced within three years from the date
the assessment of any penalty or fee became final. This bill
extended the time period for collection actions brought by
DOSH from one to three years.
SUPPORT
Asian Pacific American Legal Center of Southern California
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Labor Federation
California Nurses Association/National Nurses Organizing
Committee
California Rural Legal Assistance Foundation, Sponsor
California Teamsters Public Affairs Council
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!
Wage Justice Center
Women's Employment Rights Clinic
OPPOSITION
Hearing Date: April 14, 2010 SB 903
Consultant: Alma Perez Page 4
Senate Committee on Labor and Industrial Relations
None received to date.
Hearing Date: April 14, 2010 SB 903
Consultant: Alma Perez Page 5
Senate Committee on Labor and Industrial Relations