BILL ANALYSIS �
AB 469
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Date of Hearing: May 11, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 469 (Swanson) - As Amended: May 3, 2011
Policy Committee: Labor and
Employment Vote: 5-1
Judiciary 6-3
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill establishes the Wage Theft Prevention Act of 2011
(WTPA), which does the following:
1)Establishes criminal penalties against an employer who
willfully violates existing law regarding payment of the
minimum wage or overtime. If the amount of unpaid minimum or
overtime wages is less than $1,000, the bill establishes a
misdemeanor, punishable by up to six months in county jail
and/or a fine between $1,000 and $10,000. If the amount of
unpaid minimum or overtime wages is more than $1,000, the bill
establishes a felony punishable by 16 months, two, or three
years in state prison and/or a fine between $10,000 and
$20,000. These provisions are in addition to existing
penalties.
2)Establishes criminal penalties similar to those referenced
above against an employer who willfully fails to pay and has
the ability to pay a final court judgment or a final order
issued by the Labor Commission (LC) for all wages due to an
employee who has been discharged or quit within 90 days of the
date the judgment was entered or the order became final, as
specified.
3)Requires an employer, at the time of hiring, to provide each
employee in writing (English and the primary language of the
employee) with a notice of specified information, including
the rate of pay, date of pay, any allowances provided to the
employee (i.e., meal, lodging). Also, requires the employer
to obtain signed acknowledgement from the employee that he or
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she received the notice and notify the employee in writing of
any change to this information within seven calendar days of
the change.
4)Requires the LC to prepare templates for the notice (in
English and primary languages) and acknowledgement form
referenced above, as specified.
FISCAL EFFECT
1)Unknown, costs, likely between $175,000 and $300,000, to the
LC to prepare templates and enforce this measure, as
specified.
2)Unknown, potentially significant GF state prison costs, likely
in excess of $150,000, assuming at least three individuals are
convicted of felony.
3)In 2009, the Bureau of Field Enforcement (BFE) reported 216
citations issued to employees for wage and overtime
violations. These citations led to $650,550 in penalties and
of this amount, $383,723 was collected. The BFE also reported
$22.4 million in wages were determined to be owed to
employees. Of this amount, $13 million (58%) were paid.
SUMMARY, Continued
1)Requires a party who has received notice of a claim before the
LC to notify the LC in writing of any change in that party's
business or personal address within 10 days after the change
occurs.
2)Extends, from six months to two years, the maximum time period
the LC may require deposit of a wage bond by an employer
convicted of wage violations, as specified.
3)Provides that if an order to post a bond remains unsatisfied
for 10 days after the appeal time has expired, the LC may
require the employer to provide an accounting of assets,
subject to a civil penalty of up to $10,000 for failure to
comply.
4)Authorizes an employer to recover attorney's fees and costs
incurred to enforce a court judgment for unpaid wages.
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COMMENTS
1)Background . Existing law establishes misdemeanor criminal
penalties for various violations of the Labor Code, including
the willful failure to pay wages due. In addition California's
Penal Code include penalties for persons who knowingly defraud
any other person of money, labor, or property.
Notwithstanding any agreement to work for a lesser wage,
statute provides that any employee receiving less than the
legal minimum wage or the legal overtime compensation is
entitled to recover in a civil action the unpaid balance of
the full amount of this minimum wage or overtime compensation,
including interest on, reasonable attorney's fees, and costs
of the suit.
Current law provides that any civil penalty assessed by the
Labor and Workforce Development Agency (LWDA) for violation of
labor statute may, as an alternative, be recovered through a
civil action brought by an aggrieved employee. This civil
action can only be brought after written notice has been given
to LWDA and the employer, and the employer has been afforded
the chance to cure the alleged violation within 33 calendar
days of mailing of the notice. If the alleged violation is
not cured within the 33-day period, the employee may commence
a civil action.
Statute also authorizes the LC to compel an employer to
deposit a wage bond in an amount approved by the LC and
conditioned upon the employer paying the employees (for a
period not more than six months), as specified.
2)Rationale . The author and sponsors of this measure
(California Labor Federation and the California Rural Legal
Assistance Foundation) describe labor violation situations as
"wage theft." Examples of wage left are failure to pay
minimum wage or overtime pay; requiring workers to work with
no pay; stealing employee tips; and not paying final wages
due.
The sponsor's cite an UCLA Institute for Research on Labor and
Employment study entitled: Wage Theft and Workplace Violation
in Los Angeles: The Failure of Employment and Labor Law for
Low-Wage Workers (Ruth, Gonzales, and Narro, 2010) revealed
"nearly 30% of low-wage workers were not paid the minimum
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wage and 75% of those entitled to overtime did not receive it.
The workers most likely to be victims are the ones who can
least afford it: day laborers, car wash and garment workers."
Proponents also argue other states have passed legislation to
address wage theft, including
New Mexico (grants treble damages to victims of wage
violations); New York (enacted a disclosure law aimed at
prevention of wage theft); Maryland (governor established a
task force on Workplace Fraud); and Illinois (increased
criminal penalties for wage violations).
3)Opposition . Opponents (CalChamber, Associated of General
Contractors, California Manufacturers & Technology
Association, the California Retailers Association) contend
existing statute requires the employer to make the employee
whole or impose stiff penalties of varying amounts, if wage
statute is violated. They also argue the use of "willful" in
terms of violating statute is problematic. Specifically, they
state: "The term willful is defined as a 'willingness to
commit the act' but does not require intent to violate the law
or injure another. Accordingly, employers who may make an
honest mistake in calculating overtime rates or wages due
could be criminally prosecuted and charged with a felony under
�this bill] despite the fact that such employers had no
ill-intent to harm the employee."
4)Previous legislation . AB 2187 (Arambula) would have imposed
criminal penalties on employers for willful failure to pay
undisputed wages due within 90 days when having the ability to
pay, as specified. The bill was vetoed by Governor
Schwarzenegger in September 2010 with the following message:
"Waiting time penalties and defined timeframes for the payment
of final wages currently exist in California law, as do
mechanisms for enforcement of these obligations. Therefore,
this bill is unnecessary."
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
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319-2081