BILL ANALYSIS �
AB 197
Page 1
ASSEMBLY THIRD READING
AB 197 (Monning)
As Introduced January 27, 2011
Majority vote
LABOR & EMPLOYMENT 5-1
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|Ayes:|Swanson, Alejo, Allen, | | |
| |Furutani, Yamada | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Miller | | |
| | | | |
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SUMMARY : Increases the amount of liquidated damages that may be
awarded to an employee when an employer fails to pay minimum
wage to two times the wages unlawfully unpaid, plus interest.
EXISTING FEDERAL LAW establishes the Fair Labor Standards Act of
1938, which sets a federal minimum wage, with specified
exceptions.
EXISTING STATE LAW :
1)Sets the minimum wage for all employees in California, with
limited exceptions, and prohibits employers, unless specified,
from paying less than the state minimum wage.
2)Establishes the Industrial Wage Commission (IWC) to, among
other duties, review the adequacy of the minimum wage every
two years.
3)Permits an individual to sue his or her employer, in a civil
action, for liquidated damages in an amount that is equal to
the wages unlawfully unpaid, plus interest, when the employer
pays that individual less than the minimum wage.
FISCAL EFFECT : Unknown
COMMENTS : According to the sponsor of this bill, the California
Rural Legal Assistance
Foundation (CRLAF), this bill doubles the amount of liquidated
damages that could be assessed
AB 197
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against an employer who fails to pay minimum wages and would
bring California into alignment
with 10 other states which have recently enacted similar
legislation in an effort to deter wage
theft in the underground economy.
CRLAF states this bill is in response to the ongoing
underfunding of the Division of Labor
Standards (DLSE) and that DLSE currently has fewer authorized
positions for enforcement staff
than it had in 1980, which inhibits its ability to find, cite
and collect civil penalties for minimum
wage violations.
The author's office points out there is substantial evidence of
widespread minimum wage
violations in California, particularly in the underground
economy. UCLA's 2010 report, Wage
Theft and Workplace Violations in Los Angeles , found that 29.7%
of workers surveyed in Los
Angeles County were paid below the state minimum wage.
The Ford Foundation cited in its 2009 report, Broken Laws,
Unprotected Workers , that
depending on the industry or occupation, between 40% and 60% of
workers were not paid the
minimum wage.
PRIOR LEGISLATION : AB 1881 (Monning) of 2010 was nearly
identical to this bill and was vetoed by Governor
Schwarzenegger. In his veto message he stated in part, "the
recoveries and penalties are already available to employees and
that there was nothing indicating California's minimum wage law
was lacking."
ARGUMENTS IN SUPPORT : Proponents concur with the sponsor of
this bill stating that it will bring California into the
mainstream with other states that have recently increased
damages paid to workers when their employers cheat them out of
the state's respective minimum wages. They state that this bill
is a response to the chronic underfunding of the Division of
Labor Standards Enforcement (DLSE) which inhibits its ability to
detect, cite and collect civil penalties for minimum wage
violations, particularly in the underground economy. They
AB 197
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assert that DLSE's underfunding also significantly undercuts its
ability to collect unpaid wages.
The California Teamsters Public Affairs Council, amongst others,
argues that under existing law, in a court action to recover
wages unpaid for minimum wage, the court may award liquidated
damages equal to the amount of unlawfully unpaid wages, plus
interest. They also state this remedy enhancement will promote
compliance by California employers with California's minimum
wage requirements.
ARGUMENTS IN OPPOSITION : The Civil Justice Association of
California, the California Chamber of Commerce, the Western
Growers, California Framing Contractors Association, and the
California Hotel & Lodging Association, amongst others, strongly
oppose this bill stating that the current availability of
liquidated damages for minimum wage violations, let alone any
expansion of them, is unjustified and oppressive. They state
that liquidated damages are a type of punitive damages that may
be awarded in addition to the underpaid wages owed, interest on
the underpaid wages and statutory penalties per pay period that
employers must pay to make an employee whole. Finally, they
argue that California's employers are already subject to an
expansive number of wage and hour laws, regulations and
substantial penalties for each.
Analysis Prepared by : Lorie Erickson / L. & E. / (916)
319-2091
FN: 0000293