BILL ANALYSIS
SB 903
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Date of Hearing: June 23, 2010
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Sandre Swanson, Chair
SB 903 (Wright) - As Amended: June 7, 2010
SENATE VOTE : 21-10
SUBJECT : Penalty collections: limitations.
SUMMARY : Extends the statute of limitation period, from one
year to three years, for collection actions brought by the
Division of Labor Standards Enforcement (DLSE).
EXISTING LAW :
1)Establishes DLSE within the Department of Industrial Relations
(DIR) to enforce minimum labor standards.
2)Places a one-year statute of limitation for judgments filed on
DLSE-imposed fines.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS : DIR was established to improve the working conditions
for California's workers and advance opportunities for
profitable employment in California. DLSE enforces minimum
labor standards to ensure that employees are not required or
permitted to work under substandard unlawful conditions. DLSE
functions include enforcing labor laws and statutes covering
workers compensation insurance coverage, settling wage claims on
behalf o workers, and conducting targeted enforcement against
unscrupulous businesses that abuse the rights of workers in
specific industries.
According to a report released by the State Controllers Office
in 2008 (SCO Report), DLSE regularly conducts inspections to
ensure compliance with labor standards. When an inspection
determines that an employer failed to comply with the state's
standards, laws, or regulation, DIR may assess penalties that
range from $500 to $10,000, depending on the infraction and
number of employees affected. An employer is allowed to appeal
with the office of the Labor Commissioner any penalties assessed
SB 903
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by DLSE. Existing law also permits employers, once the appeals
process with the Labor Commissioner is completed, to pursue
additional appeals through the judicial system.
The SCO Report found that, of the $71.9 million in fines issued
from 2004 to 2006, only $17.8 million was collected by DIR. The
$54.1 million in uncollected fines represent 75.3 percent of the
total fines assessed in that two year period. In October of
2006, DIR established a Collection Unit (Unit) to improve its
collection efforts. DIR's 2009 Annual Report on the
Effectiveness of Bureau of Filed Enforcement (BFE) Report notes
that the Unit has had some success since its implementation.
The Unit staff processed 3,257 judgments in 2009 and collected
$3,064,181 in penalties.
The SCO Report recommends that DIR pursue legislation to extend
the statute of limitation period for filing a judgment on
DLSE-imposed fines.
ARGUMENTS IN SUPPORT :
In its support of this measure, the California Rural Legal
Assistance Foundation (CRLAF) writes that this bill will enhance
the effective collection of civil penalties for labor law
violations by DLSE. CRLAF, the California Labor Federation and
the California Nurses Association all assert that, if enacted,
this measure will conform the statute of limitations period for
DLSE penalty collection actions to that which already exists for
the Division of Occupational Safety and Health (DOSH) civil
penalty collection activity.
CRLAF notes that DLSE's collection rate has improved since the
release of the SCO Report, but states that in 2009, DLSE issues
approximately $16 million dollars less in civil penalty
assessments for labor law violations than it did in 2008. They
write that DLSE continues to be under-funded and state that
cases will remain open and collection rates will fall after the
one-year deadline. CRLAF believes that it is prudent to equip
DLSE with the same collection tools as DOSH has had since 1991.
REGISTERED SUPPORT / OPPOSITION :
Support
SB 903
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California Labor Federation, AFL-CIO
California Nurses Association/ National Nurses Organizing
Committee
California Rural Legal Assistance Foundation
Opposition
None on file.
Analysis Prepared by : Shannon McKinley / L. & E. / (916)
319-2091