BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 2099|
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THIRD READING
Bill No: AB 2099
Author: Cedillo (D)
Amended: As introduced
Vote: 21
SENATE LABOR & INDUSTRIAL RELATIONS COMM. : 5-1, 6/13/12
AYES: Lieu, DeSaulnier, Leno, Padilla, Yee
NOES: Wyland
NO VOTE RECORDED: Runner
ASSEMBLY FLOOR : 50-25, 5/10/12 - See last page for vote
SUBJECT : Employment: wage, hour and working conditions
violations
SOURCE : Author
DIGEST : This bill increases the fine for specified wage
and hour violations from no less than $100 to no less than
$250 and makes non substantive technical change.
ANALYSIS : Existing law states that every employer or
other person acting either individually or as an officer,
agent, or employee of another person is guilty of a
misdemeanor and is, punishable by a fine of not less than
$100 or by imprisonment for not less than 30 days, or by
both, who does any of the following:
1. Requires or causes any employee to work for longer hours
than those fixed, or under conditions of labor
CONTINUED
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prohibited by an order of the Industrial Welfare
Commission (IWC).
2. Pays or causes to be paid to any employee a wage less
than the minimum fixed by an order of the IWC.
3. Violates or refuses or neglects to comply with specified
provisions of the law or any order or ruling of the IWC.
This bill increases the fine for specified wage and hour
violations from no less than $100 to no less than $250 and
makes non substantive technical change.
Comments
Studies on wage theft . In 2008, the Ford Foundation
sponsored a survey of 4,387 workers in low-wage industries
in the three largest United States cities: Chicago, Los
Angeles and New York City. The report of that survey,
titled Broken Laws, Unprotected Workers: Violations of
Employment and Labor Laws in America's Cities, revealed
that 26% of workers in the sample were paid less than the
legally required minimum wage the prior work week, and 60%
of these workers were underpaid by more than $1 per hour.
In addition, 76 % of the respondents who worked overtime in
the previous week were not paid the legally required
overtime rate by their employers. The study also noted that
minimum wage violation rates vary significantly by
industry, and occupation. For example, some industries,
such as apparel and textile manufacturing and personal and
repair services have minimum wage violation rates that
exceed 40%, while others, including restaurants, and retail
and grocery stores, have rates of 20 to 25%.
A 2010 follow-up study by the University of California, Los
Angeles Institute for Research on Labor and Employment,
titled Wage Theft and Workplace violations in Los Angeles:
The Failure of Employment and Labor Law for Low-Wage
Workers, utilized the data from the 2008 survey but focused
specifically on Los Angeles County. This study focused on
survey results of 1,815 workers in Los Angeles County.
This study found similar results to the national survey:
almost 30% of the workers sampled were paid less than the
minimum wage in the prior work week, and 63.3% of these
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workers were underpaid by more than $1 per hour. Assuming
a full-year work schedule, Los Angeles County survey
respondents lost an average of $2,070.00 annually due to
workplace violations, out of total annual earnings of
$16,536.00. The study estimated that workers in low-wage
industries in Los Angeles County lose more than $26.2
million per week as a result of employment and labor law
violations.
Both of the studies make the same public policy
recommendations to address these issues, which included
strengthening government enforcement of existing employment
and labor laws and stiffening the penalties.
According to the author's office, current monetary
penalties serve as an inadequate disincentive for employer
wage and hour violations. Proponents argue that in this
economy, with so many people out of work and employees
desperate to keep their jobs, some employers are taking
advantage by asking employees to work off the clock, to
work for less than minimum wage, to forego breaks, or even
to volunteer at the workplace. Unfortunately, they argue,
the scarce resources for labor law enforcement make it
unlikely that a company will get caught and the fines are
too low to provide much of a disincentive. This bill
increases minimum fines from at least $100 to at least
$250. Proponents argue that an increase in fines for these
crimes is essential if prosecutors are to have the tools
they need to address the massive scale of wage theft that
is involved in some of these cases. They argue that this
change, while modest, increases the cost of cheating
workers out of wages and thereby may discourage employers
from skirting the law.
Prior Legislation
AB 469 (Swanson), Chapter 655, Statutes of 2011, enacted
the Wage Theft Prevention Act of 2011 which increased
penalties, bonding requirements, and notice requirements on
employers to strengthen existing disincentives to violate
wage law. Among other things, the bill provided that in
addition to being subject to a civil penalty, any employer
who pays or causes to be paid to any employee a wage less
than the minimum fixed by an order of the commission shall
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be subject to paying restitution of wages to the employee.
Additionally, the bill made it a misdemeanor for an
employer to willfully violate specified wage statutes or
orders, or willfully fail to pay a final court judgment or
final order of the Labor Commissioner for wages due.
AB 2187(Arambula, 2010) would have increased criminal
penalties for an employer's willful failure to pay wages.
The bill was vetoed by Governor Schwarzenegger, who stated
in his veto message that he felt that existing law was
sufficient. The message read:
AB 2187 would create a new criminal prohibition against
a person or
an employer who, having the ability to pay, willfully
fails to pay
all wages to an employee who has been discharged or who
has quit
within 90 days of the date of the wages becoming due.
The bill
contains an exemption for instances in which the
employee's
entitlement to unpaid wages is disputed by the employer
in a civil
action or proceeding by the Labor Commissioner unless
there is a
final judgment in favor of the employee.
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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/13/12)
AFSCME, AFL-CIO
California Communities United Institute
California Conference Board of the Amalgamated Transit
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Union
California Conference of Machinists
California Labor Federation
California Rural Legal Assistance Foundation
California State Association of Electrical Workers
California State Pipe Trades Council
California Teamsters Public Affairs Council
Coalition of California Utility Employees
Engineers and Scientists of California
International Longshore and Warehouse Union
International Union of Elevator Constructors
Professional and Technical Engineers, Local 21
State Building and Construction Trades Council of
California
UNITE HERE!
United Food and Commercial Workers Union, Western States
Council
Voters Injured at Work
Western States Council of Sheet Metal Workers
OPPOSITION : (Verified 6/13/12)
Air Conditioning Trade Association
Associated Builders and Contractors of California
California Asian Pacific Chamber of Commerce
California Association of Bed and Breakfast Inns
California Association of Health Facilities
California Building Industry Association
California Chamber of Commerce
California Farm Bureau Federation
California Framing Contractors Association
California Grocers Association
California Hotel and Lodging Association
California Independent Grocers Association
California League of Food Processors
California Lodging Industry Association
California Manufacturers and Technology Association
California Retailers Association
Plumbing-Heating-Cooling Contractors Association of
California
Redondo Beach Chamber of Commerce and Visitors Bureau
Western Electrical Contractors Association, Inc.
ARGUMENTS IN SUPPORT : The California Rural Legal
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Assistance Foundation (CRLAF) asserts that violations are
commonly committed by unscrupulous employers operating in
the Underground Economy and the current fine amount is too
low to deter even insignificant misconduct. CRLAF believes
an increase in fines for these crimes is essential if
prosecutors are to have the tools they need to address the
massive scale of wage theft that is involved in some of
these cases. A good example is found in the recent $2.2
million dollar settlement of a CRLAF class action brought
on behalf of thousands of seasonal agricultural workers.
The employer and labor contractor, acting as joint
employers, were alleged to have systematically cheated the
workers of minimum wages and overtime wages.
ARGUMENTS IN OPPOSITION : A broad coalition of employer
groups states that the Labor Code (LAB) provision this bill
seeks to amend, already imposes a statutory penalty,
despite the lack of any specific intent on behalf of the
employer or his/her agent to violate the law. They also
state, that specifically, the penalty may be imposed simply
on the basis that the employer "neglected" to comply.
"Neglect" is one of the lowest civil standards of liability
to prove and requires no evidence of actual intent to do
harm. Accordingly, an employer who is trying to comply
with California's wage and hour laws, even seeks out
direction from the Division of Labor Standards Enforcement
for advice on how to comply, may still be subject to this
statutory penalty if a court ultimately determines the
employer failed to comply with a duty under the LAB or Wage
Orders. Finally, they believe that due to the risk of
liability and litigation under this existing provision of
the LAB, they are opposed to any increase in the statutory
penalty that may be imposed and there is no evidence that a
stronger deterrent is needed in the LAB than those that
already exist.
ASSEMBLY FLOOR : 50-25, 5/10/12
AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block,
Blumenfield, Bonilla, Bradford, Brownley, Buchanan,
Butler, Charles Calderon, Campos, Carter, Cedillo, Davis,
Dickinson, Eng, Feuer, Fong, Fuentes, Galgiani, Gatto,
Gordon, Hall, Hayashi, Roger Hern�ndez, Hill, Huber,
Hueso, Huffman, Lara, Bonnie Lowenthal, Ma, Mendoza,
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Mitchell, Monning, Pan, Perea, V. Manuel P�rez,
Portantino, Skinner, Solorio, Swanson, Torres,
Wieckowski, Williams, Yamada, John A. P�rez
NOES: Achadjian, Bill Berryhill, Conway, Cook, Donnelly,
Beth Gaines, Garrick, Gorell, Grove, Hagman, Halderman,
Harkey, Jones, Knight, Logue, Mansoor, Miller, Morrell,
Nestande, Nielsen, Norby, Silva, Smyth, Valadao, Wagner
NO VOTE RECORDED: Chesbro, Fletcher, Furutani, Jeffries,
Olsen
PQ:k 6/14/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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