BILL ANALYSIS �
Senate Committee on Labor and Industrial Relations
William W. Monning, Chair
Date of Hearing: June 12, 2013 2013-2014 Regular
Session
Consultant: Deanna D. Ping Fiscal:Yes
Urgency: No
Bill No: AB 442
Author: Nazarian
As Introduced: February 19, 2013
SUBJECT
Employees: wages
KEY ISSUE
Should the Legislature allow the Labor Commissioner to recover
liquidated damages on behalf of a worker when a citation for
failure to pay minimum wage has been issued?
ANALYSIS
Existing law sets a minimum wage for all employees in
California, with limited exceptions, and prohibits employers,
unless specified, from paying less than the state minimum wage.
Existing law provides the Labor Commissioner with the authority
to investigate employee complaints and allows the Labor
Commissioner to hold a hearing in any action to recover wages,
including orders of the Industrial Welfare Commission. The
Labor Commissioner may require an award in the amount of the
wages owed, plus interest. Existing Civil Code sets the
interest rate at 10 percent. (Labor Code �� 98 & 98.2 and Civil
Code � 3289)
Existing law allows the division or department to commence and
prosecute a civil action to recover unpaid minimum wages or
unpaid overtime compensation, including interesting thereon.
(Labor Code �1193.6)
Existing law provides that an employee who receives less than
the minimum wage is entitled to recover in a civil action, the
unpaid balance of the full amount of the minimum wage,
liquidated damages in an amount equal to the wages unlawfully
unpaid and interest thereon, reasonable attorney's fees and
costs of suit. (Labor Code �1194)
Existing law also requires that if an employee is found to have
been paid less than the minimum wage, that employee must be paid
liquidated damages in an amount that is equal to the wages
unlawfully unpaid, plus interest. Existing Civil Code sets the
interest rate at 10 percent. (Labor Code �1194.2 and Civil Code
� 3289)
Existing law states that if the employer demonstrates to the
satisfaction of the court or the Labor Commissioner that the
failure to pay minimum wage was in good faith and that the
employer had reasonable grounds for believing that the act or
omission was not a violation of the law, the court or the Labor
Commissioner may, as a matter of discretion, refuse to award
liquidated damages or reduce the amount of liquidated damages.
(Labor Code �1194.2)
Existing law provides that, in a citation for a minimum wage
violation issued by the Labor Commissioner, an employer shall be
subject to a specified civil penalty and restitution of wages.
(Labor Code �1197.1)
This bill extends the award of liquidated damages to those
employees whose employer has been cited by the Labor
Commissioner in violation of minimum wage laws.
Specifically, this bill adds "liquidated damages" paid to the
employee to the list of things that a person who the Labor
Commissioner has determined to have paid or caused to be paid a
wage less than the minimum wage is subject to.
COMMENTS
1. Need for this bill?
Hearing Date: June 12, 2013 AB 442
Consultant: Deanna D. Ping Page 2
Senate Committee on Labor and Industrial Relations
Currently, California workers can file a civil action or may
file an administrative complaint with the Labor Commissioner
to recover unpaid wages. As was discussed above, an employee
who waged a successful civil action to receive unpaid minimum
wage balances would be entitled to recover the full amount of
the unpaid balance of wages, including interest, reasonable
attorney's fees and costs of suit. Liquidated damages could
then also be awarded. After AB 240 of 2012 was enacted, a
worker can also be awarded liquidated damages through the
Labor Commissioner hearing process.
A worker may also recover owed wages as a result from an
inspection from the Division of Labor Standards and
Enforcement's Bureau of Field Enforcement (BOFE). BOFE
conducts inspections of industries to ensure compliance with
the Labor Code. While BOFE does not pursue individual wage
claims, at times the investigation results in an audit of the
employer's time and payroll records. If this occurs, the
Division will attempt to collect wages for all employees found
to have been underpaid. However, the Division cannot collect
liquidated damages, requiring the worker to file an
administrative complaint with DLSE to collect liquidated
damages.
According to the author's office, AB 442 remedies this issue
by expanding the Labor Commissioner's authority to recover
unpaid minimum wage liquidated damages after issuing a
citation - ensuring that workers have the same monetary relief
whether they pursue their claims administratively through the
courts or through the Labor Commissioner.
2. Double Referral:
AB 442 has been doubled referred to Senate Judiciary Committee
for hearing.
3. Proponent Arguments :
Proponents argue that the bill expands the Labor
Commissioner's authority to help low-wage workers in wage
Hearing Date: June 12, 2013 AB 442
Consultant: Deanna D. Ping Page 3
Senate Committee on Labor and Industrial Relations
theft cases, ensuring that workers have the same monetary
relief whether they pursue claims through the courts or via
the Labor Commissioner's existing authority. Proponents
contend that claims made by low-wage workers may not be
sufficient enough to attract an attorney, which leaves the
worker with no alternative other than an administrative
hearing.
Lastly, proponents contend that the failure to enact this bill
will create new costs to the Division of Labor Standards
Enforcement (DLSE). Specifically, proponents argue that
because the award of liquidated damages is mandatory when
minimum wages have not been paid, the failure to recover those
damages for the worker after a citation is issued will likely
result in the worker bringing a separate claim before the
Labor Commissioner - adding unnecessary new costs to DLSE and
also adds delays for workers.
4. Opponent Arguments :
The Construction Employer's Association opposes the bill and
argues that the bill is problematic because it would expand
the current penalties for wage violations to add liquidated
damages. Opponents contend that while they support punishing
employer that do not follow the wage statutes and regulations,
if passed the bill would add liquidated damages to existing
civil penalties and restitution, which sets a very bad
precedent in California. Additionally, opponents believe that
the existing wage protections in California are sufficient to
protect workers. Lastly, opponents believe that California's
existing labor laws are burdensome and impacts job creation
and business expansion and relocation.
5. Prior Legislation :
AB 240 (Bonilla), Chapter 272, Statutes of 2012 - amended
Labor Code sections 1194.2 and 98 to authorize the Labor
Commissioner to award unpaid minimum wage liquidated damages
in administrative wage claim hearings under the same
conditions that existed for allowing a court to award those
same damages to workers.
Hearing Date: June 12, 2013 AB 442
Consultant: Deanna D. Ping Page 4
Senate Committee on Labor and Industrial Relations
AB 469 (Swanson), Chapter 655, Statutes of 2011 - known as the
Wage Theft Prevention Act of 2011, the bill enacted several
anti-wage theft initiatives including extending the period
within which the division may commence a collection action
from one year to three years and in addition to being subject
to a civil penalty and makes it a misdemeanor if an employer
willfully violates specified wage statutes or orders, among
other provisions.
SUPPORT
California Rural Legal Assistance Foundation (sponsor)
American Federation of State, County, and Municipal Employees,
AFL-CIO
California Federation of Teachers
OPPOSITION
Construction Employer's Association
Hearing Date: June 12, 2013 AB 442
Consultant: Deanna D. Ping Page 5
Senate Committee on Labor and Industrial Relations