BILL ANALYSIS �
AB 1723
Page 1
Date of Hearing: April 8, 2014
ASSEMBLY COMMITTEE ON JUDICIARY
Bob Wieckowski, Chair
AB 1723 (Nazarian) - As Introduced: February 14, 2014
SUBJECT : EMPLOYEES: WAGES
KEY ISSUE : SHOULD EMPLOYEES BE ABLE TO RECOVER ANY APPLICABLE
"WAITING TIME" PENALTIES OWED WHEN THE LABOR COMMISSIONER ISSUES
A MINIMUM WAGE CITATION AS AUTHORIZED UNDER EXISTING LAW?
SYNOPSIS
This bill largely falls within the jurisdiction and expertise of
the Assembly Labor and Employment Committee, which recently
passed the measure by a vote of 5-1. The analysis therefore
largely relies on the excellent work of that Committee in
setting forth the proposed law changes made by the bill.
Current law provides employees with three avenues to pursue the
recovery of unpaid minimum wages under the Labor Code. First,
employees have the option to file an administrative wage claim
with the Labor Commissioner. This filing results in a so-called
"Berman hearing," or an administrative hearing process for the
adjudication of the claim including wages, penalties, and other
demands for compensation. A second potential avenue is that
employees may file a civil action to recover the full amount of
the minimum wage, interest, reasonable attorney's fees, and
costs of the suit they claim they are entitled to. Finally, the
Labor Commissioner may him or herself issue a citation for
failure to pay the state minimum wage after an inspection or
investigation. This citation subjects the employer to a civil
penalty, restitution of wages, and liquidated damages payable to
the employee. Section 203 of the Labor Code specifies that an
employer who willfully fails to pay wages when due to a resigned
or discharged employee is required to pay the worker a day's
wage for each day in which wages owed are not paid for up to a
maximum of 30 days. However current law does not appear to
allow for the inclusion of "waiting time" penalties in the Labor
Commissioner minimum wage citation process. It only appears to
allow the Labor Commissioner to recover liquidated damages and
restitution of wages. According to the author, this means an
aggrieved employee currently may only seek to recover "waiting
time" penalties through a civil suit or a Berman hearing. This
bill therefore seeks to provide the Labor Commissioner with new
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and clear statutory authority to recover applicable "waiting
time penalties" when citing employers for a failure to pay
minimum wages. The measure is supported by California Rural
Legal Assistance Foundation, its sponsor, as well as Worksafe.
It is opposed by California Association for Health Services at
Home.
SUMMARY : Provides that minimum wage citations issued by the
Labor Commissioner will also include any applicable "waiting
time" penalties provided for under existing law, as specified.
Specifically, this bill :
1)Provides that, in a citation by the Labor Commissioner for
failure to pay minimum wage, an employer who fails to pay the
minimum wage shall be subject to any applicable "waiting time"
penalties under existing law in addition to existing civil
penalties, restitution of wages, and liquidated damages.
2)Makes related conforming changes to existing law.
EXISTING LAW :
1)Authorizes the Labor Commissioner to investigate and enforce
statutes and orders of the Industrial Welfare Commission that,
among other things, specify the requirements for the payment
of wages by employers.
2)Provides for criminal and civil penalties for violations of
statutes and orders of the commission regarding payment of
wages.
3)Authorizes the Labor Commissioner to recover liquidated
damages for an employee who brings a complaint alleging
payment of less than the minimum wage fixed by an order of the
commission or by statute.
4)Subjects 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 to a citation that includes a civil penalty, the
payment of restitution of wages, and payment of liquidated
damages to the employee.
5)Provides that if an employer willfully fails to pay any wages
of an employee who is discharged or who quits, the wages of
the employee shall continue as a penalty from the due date
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thereof at the same rate until paid or until an action
therefor is commenced; but the wages shall not continue for
more than 30 days.
FISCAL EFFECT : As currently in print this bill is keyed fiscal.
COMMENTS : Under existing law, there are generally three main
avenues available under the Labor Code for the recovery of
unpaid minimum wages.
First, an employee may file an administrative wage claim with
the Labor Commissioner. (Labor Code Section 98.) Existing law
provides for an administrative hearing process for the
adjudication of such claims, including wages, penalties, and
other demands for compensation, including liquidated damages.
(Labor Code Section 98.) These administrative hearings are
usually referred to as "Berman hearings."
Second, an employee may file a civil action to recover the full
amount of the minimum wage, including interest, reasonable
attorney's fees and costs of suit. (Labor Code Section 1194.)
In such a civil action, an employee shall also be entitled to
liquidated damages in an amount equal to the wages unlawfully
paid. (Labor Code Section 1194.2.)
Third, existing law authorizes the Labor Commissioner to issue a
citation for failure to pay the state minimum wage after an
inspection or investigation. (Labor Code Section 1197.1.)
Existing law provides that the employer shall be subject to a
civil penalty, restitution of wages, and liquidated damages
payable to the employee. Existing law also provides for an
administrative hearing process for a person to contest a
citation or proposed assessment of civil penalties, wages and
liquidated damages. (Labor Code Section 1197.1.)
Under a different provision of existing law, when an employer
willfully fails to pay any wages of an employee who is
discharged or who quits, the wages of the employee continue as a
penalty for up to 30 days. (Labor Code Section 203.) These
wages are often referred to as "waiting time" penalties and are
generally designed to ensure the prompt payment of earned wages.
Actions to recover unpaid minimum wages often include claims
for "waiting time" penalties under Labor Code Section 203.
Under existing law, the Labor Commissioner lacks the statutory
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authority to recover "waiting time" penalties as part of a
citation for a minimum wage violation. This bill seeks to
correct this gap.
ARGUMENTS IN SUPPORT : This bill is sponsored by the California
Rural Legal Assistance Foundation, who argues that it will
ensure that victims of wage theft will recover any applicable
"waiting time" penalties when the Labor Commissioner issues a
citation for a minimum wage violation.
The sponsor states the following:
Without the legal authority to recover these monetary
penalties for workers as part of a [Labor Commissioner]
minimum wage citation, state policy to ensure prompt
payment of wages is significantly undercut, and workers are
denied all that is due to them following a theft of their
wages. In addition, because payment of 'waiting time'
penalties, where applicable, is mandatory, if the [Labor
Commissioner] does not recover them when it cites for a
minimum wage violation, workers will simply file a
subsequent 'Berman hearing' administrative claim to recover
them. These hearings will create unnecessary and completely
avoidable costs for [the Labor Commissioner], and will also
result in possibly lengthy delays for workers seeking to be
made whole after theft of their wages.
ARGUMENTS IN OPPOSITION : The California Association for Health
Services at Home (CAHSAH) expresses concerns about whether,
under this bill, an employer would have the same opportunity to
present defenses against "waiting time" penalties as they would
under the normal "Berman hearing" process. They state that the
potential of penalties elevates the need for a fair hearing to
ensure employers have equal protections under the law and the
ability to present information.
REGISTERED SUPPORT / OPPOSITION :
Support
California Rural Legal Assistance Foundation (sponsor)
Worksafe
Opposition
AB 1723
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California Association for Health Services at Home
Analysis Prepared by : Drew Liebert and Marisa Shea / JUD. /
(916) 319-2334