BILL ANALYSIS Ó
AB 2074
Page 1
ASSEMBLY THIRD READING
AB 2074 (Roger Hernández)
As Introduced February 20, 2014
Majority vote
LABOR & EMPLOYMENT 5-1
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|Ayes:|Roger Hernández, Alejo, | | |
| |Chau, Holden, | | |
| |Ridley-Thomas | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Grove | | |
| | | | |
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SUMMARY : Provides that the statute of limitations for
liquidated damages for failure to pay the minimum wage is the
same period as the statute of limitations for actions to recover
the unpaid wages.
EXISTING LAW :
1)Requires all employers to pay employees not less than the
state minimum wage.
2)Authorizes an employee to bring an administrative or civil
claim for the unpaid balance of minimum wages owed to that
employee.
3)Provides that in any action to recover unpaid minimum wages,
an employee shall be entitled to recover liquidated damages in
an amount equal to the wages unlawfully unpaid and interest
thereon.
4)Provides that if the employer demonstrates to the satisfaction
of the court or the Labor Commissioner that the act or
omission giving rise to the action was in good faith and that
the employer had reasonable grounds for believing that the act
or omission was not a violation of any provision of the Labor
Code relating to minimum wage, or an order of the commission,
the court or the Labor Commissioner may, as a matter of
discretion, refuse to award liquidated damages or award any
amount of liquidated damages not exceeding the amount
AB 2074
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specified above.
FISCAL EFFECT : None. This bill is keyed non-fiscal by the
Legislative Counsel.
COMMENTS : Current law requires all employers to pay workers not
less than the state minimum wage. In addition, existing law
provides that if an employer fails to pay the minimum wage, the
worker is entitled to liquidated damages in an amount equal to
the unpaid wages owed. This provision of liquidated damages is
an acknowledgement of the seriousness of minimum wage violations
and is intended to act at a deterrent for an employer to violate
the law.
The statute of limitations for failure to pay the minimum wage
is generally three years. However, in a recent California Court
of Appeal decision, the court held that the statute of
limitations for the liquidated damages is only one year. Bain
v. Tax Reducers, 219 Cal. App. 4th 110 (2013).
According to the author, this disparity in the statute of
limitations dilutes the deterrent effect of liquidated damages
for minimum wage violations.
In short, the result of the court's decision is that an employee
can recover for three years of minimum wage violations.
However, the worker can only recover liquidated damages for a
one year period of time. Although existing law contains other
civil penalties for failure to pay minimum wage, liquidated
damages are payable to the worker. Therefore, the author
contends that as a result of the court's decision, there is no
effective penalty for the employer for years two and three. If
they are found to have violated the law, the only remedy is to
make them pay the minimum wages they should have paid if they
were following the law.
The author states that the deterrent effect of the liquidated
damages can only be fulfilled if the worker is able to recover
them for the entire statutory period. Therefore, this bill
provides that the statute of limitation for liquidated damages
for failure to pay minimum wage is the same as the statute of
limitations for the wage claims themselves.
Supporters argue that this bill will bring consistency between
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the statute of limitations for claims of liquidated damages for
minimum wage violations and claims for unpaid minimum wages.
Supporters state that allowing for the claim of unpaid wages,
yet only allowing for the liquidated damages for one year, is a
misstep in justice. Restricting the ability to obtain
liquidated damages dilutes the deterrent effect on employers who
fail to pay the minimum wage. A damages scheme that only adds
an additional liquidated damages award for one year of an unpaid
minimum wage claim sends a statement that there is no real
penalty for such worker exploitation beyond one year. They
conclude that workers should be able to recover liquidated
damages for the entire statutory period.
There is no opposition on file.
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091
FN: 0003356