Senate Bill No. 919

Introduced by Senator Wright

January 27, 2014

An act to amend Section 98 of the Labor Code, relating to employment.

LEGISLATIVE COUNSEL’S DIGEST

SB 919, as introduced, Wright. Employees: wage disputes.

Existing law authorizes the Labor Commissioner to investigate employee complaints and enforce statutes and orders of the Industrial Welfare Commission that, among other things, specify the requirements for the payment of wages by employers. Under existing law, the Labor Commissioner is authorized to provide for a hearing for an action to recover wages, penalties, and other demands for compensation, as specified. Existing law requires a party who receives actual notice of a wage dispute claim before the Labor Commissioner to notify the commissioner in writing of any change in the party’s business or personal address, as specified, for purposes of being served with a notice of hearing on the matter.

Existing law prohibits a default from being taken against a defendant that fails to appear or answer within the time allowed, and requires the Labor Commissioner to hear the evidence offered and issue an order, decision, or award in accordance with the evidence.

This bill would provide that a party that has failed, without just and substantial cause, to timely provide the above-described change of address information is subject to repayment of treble the amount of all costs incurred by the opposing party in attempting to perfect service. The bill would allow for a default to be taken against a defendant that has willfully evaded service of process to avoid responsibility for unpaid wages or penalties, under specified circumstances.

The bill also would make various technical, nonsubstantive changes to the above provisions.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 98 of the Labor Code is amended to read:

98.  

(a)  begin insert (1) end insert begin insert   end insert The Labor Commissioner is authorized to
investigate employee complaints. The Labor Commissioner may
provide for a hearing in any action to recover wages, penalties,
and other demands for compensation, including liquidated damages
if the complaint alleges payment of a wage less than the minimum
wage fixed by an order of the Industrial Welfare Commission or
by statute, properly before the division or the Labor Commissioner,
including orders of the Industrial Welfare Commission, and shall
determine all matters arising under his or her jurisdiction. It is
within the jurisdiction of the Labor Commissioner to accept and
determine claims from holders of payroll checks or payroll drafts
returned unpaid because of insufficient funds, if, after a diligent
search, the holder is unable to return the dishonored check or draft
to the payee and recover the sums paid out. begin delete Within end delete

begin insert (2) end insert begin insert   end insert begin insert Within end insert 30 days of the filing of the complaint, the Labor
Commissioner shall notify the parties as to whether a hearing will
be held, whether action will be taken in accordance with Section
98.3, or whether begin delete no end delete further action will begin insert not end insert be taken on the
complaint. If the determination is made by the Labor Commissioner
to hold a hearing, the hearing shall be held within 90 days of the
date of that determination. However, the Labor Commissioner
may postpone or grant additional time before setting a hearing if
the Labor Commissioner finds that it would lead to an equitable
and just resolution of the dispute. begin delete A end delete

begin insert (3) end insert begin insert   end insert begin insert A end insert party begin delete who end delete begin insert that end insert has received actual notice of a claim before
the Labor Commissioner shall, while the matter is before the Labor
Commissioner, notify the Labor Commissioner in writing of any
change in that party’s business or personal address within 10 days
after the change in address occurs. begin insert A party that has failed, without
just and substantial cause, to timely provide change of address
information as required by this paragraph shall be subject to
repayment of treble the amount of all costs incurred by the
opposing party in attempting to perfect service. The Labor
Commissioner shall include these costs in any order, decision, or
award under this section. end insert

begin delete

It

end delete

begin insert (4) end insert begin insert   end insert begin insert It end insert is the intent of the Legislature that hearings held pursuant
to this section be conducted in an informal setting preserving the
rights of the parties.

(b) When a hearing is set, a copy of the complaint, which shall
include the amount of compensation requested, together with a
notice of time and place of the hearing, shall be served on all
parties, personally or by certified mail, or in the manner specified
in Section 415.20 of the Code of Civil Procedure.

(c) Within 10 days after service of the notice and the complaint,
a defendant may file an answer with the Labor Commissioner in
any form as the Labor Commissioner may prescribe, setting forth
the particulars in which the complaint is inaccurate or incomplete
and the facts upon which the defendant intends to rely.

(d) No pleading other than the complaint and answer of the
defendant or defendants shall be required. Both begin insert the complaint and
answer end insert shall be in writing and shall conform to the form and the
rules of practice and procedure adopted by the Labor
Commissioner.

(e) Evidence on matters not pleaded in the answer shall be
allowed only on terms and conditions the Labor Commissioner
shall impose. In all these cases, the claimant shall be entitled to a
continuance for purposes of review of the new evidence.

(f)  begin delete If end delete begin insert (1) end insert begin insert   end insert begin insert Except as otherwise provided in paragraph (2), if end insert the
defendant fails to appear or answer within the time allowed under
this chapter, begin delete no end delete begin insert a end insert default shall begin insert not end insert be taken against begin delete him or her end delete begin insert the
defendant end insert , but the Labor Commissioner shall hear the evidence
offered and shall issue an order, decision, or award in accordance
with the evidence. A defendant failing to appear or answer, or
subsequently contending to be aggrieved in any manner by want
of notice of the pendency of the proceedings, may apply to the
Labor Commissioner for relief in accordance with Section 473 of
the Code of Civil Procedure. The Labor Commissioner may afford
this relief. begin delete No end delete begin insert A end insert right to relief, including the claim that the findings
or award of the Labor Commissioner or judgment entered thereon
are void upon their face, shall begin insert not end insert accrue to the defendant in any
court unless prior application is made to the Labor Commissioner
in accordance with this chapter.

begin insert

(2) A default may be taken against a defendant that has willfully
evaded service of process to avoid responsibility for unpaid wages
or penalties. The Labor Commissioner, as a matter of a just and
reasonable inference, may exercise his or her discretion under
this paragraph to enter a default judgment against an employer,
upon a showing of both of the following:

end insert begin insert

(A) The Labor Commissioner has attempted to serve notice of
a hearing or conference by personal service, service by certified
mail, service by overnight delivery service with confirmation of
delivery provided to the Labor Commissioner by the delivery
service, or in the manner specified in Section 415.20 of the Code
of Civil Procedure. That attempted service shall have been directed
to the address included on the most recent wage statement or check
issued to the employee, the current address provided to the Labor
Commissioner as a condition of any licensing requirement, or the
address for service of process for the employer that is on file with
the Secretary of State.

end insert begin insert

(B) The Labor Commissioner has established any of the
following factors:

end insert begin insert

(i) The defendant has multiple outstanding failures to notify the
Labor Commissioner of changes to its business or personal
address.

end insert begin insert

(ii) The defendant has a prior history of failure to timely notify
the Labor Commissioner or other state or local agencies of its
business or personal address change, as required by state or local
law or regulation.

end insert begin insert

(iii) The defendant refused to accept delivery of the certified
mail or overnight delivery of the notice of conference or hearing,
despite the fact that the defendant was conducting business at the
address at which delivery was attempted.

end insert begin insert

(iv) The defendant has a prior history of any of the following:

end insert begin insert

(I) Failing to satisfy judgments for wages and penalties by
evading service.

end insert begin insert

(II) Staging an artificial business shutdown.

end insert begin insert

(III) Engaging in deception with respect to the ability to pay
wages due.

end insert begin insert

(IV) Engaging in or attempting bankruptcy fraud with respect
to wages owed.

end insert begin insert

(V) Hiding, or attempting to hide, personal or business assets.

end insert begin insert

(VI) Breaching settlement agreements involving unpaid wages
or penalties.

end insert begin insert

(VII) Issuing a check for wages or penalties due to an employee
from an account with insufficient funds.

end insert begin insert

(VIII) Selling business assets, including real estate, in an attempt
to avoid paying wages or penalties pursuant to an order, decision,
award, judgment, or settlement agreement.

end insert begin insert

(v) The defendant has provided a false or misleading business
or personal address to any state or local entity.

end insert begin insert

(vi) The defendant has engaged in any unlawful conduct in
avoiding service.

end insert begin insert

(vii) The defendant has a prior history of engaging in coercion
or retaliation against current or former employees for exercising
any right provided for in this code, including the right to file a
claim for unpaid wages or penalties against the defendant or the
defendant’s business.

end insert begin insert

(3) (A) Paragraph (2) shall not be construed to alter a
defendant’s rights of de novo appeal under Section 98.2 following
the issuance of an order, decision, or award against it. If a default
is taken against a defendant and the defendant contends that it is
aggrieved by want of notice of the proceedings under this section,
the defendant may apply to the Labor Commissioner for, and the
Labor Commissioner may afford, relief in accordance with Section
473 of the Code of Civil Procedure.

end insert begin insert

(B) No right to relief, including the claim that the findings or
award of the Labor Commissioner or the judgment entered is void
upon its face, shall accrue to the defendant in any court, unless
prior application is made to the Labor Commissioner in
accordance with this chapter.

end insert

(g) All hearings conducted pursuant to this chapter are governed
by the division and by the rules of practice and procedure adopted
by the Labor Commissioner.

(h) (1) Whenever a claim is filed under this chapter against a
person operating or doing business under a fictitious business
name, as defined in Section 17900 of the Business and Professions
Code, which relates to the person’s business, the division shall
inquire at the time of the hearing whether the name of the person
is the legal name under which the business or person has been
licensed, registered, incorporated, or otherwise authorized to do
business.

(2) The division may amend an order, decision, or award to
conform to the legal name of the business or the person begin delete who end delete begin insert that end insert
is the defendant to a wage claim, if it can be shown that proper
service was made on the defendant or begin delete his or her end delete begin insert its end insert agent, unless
a judgment had been entered on the order, decision, or award
pursuant to subdivision begin delete (d) end delete begin insert (e) end insert of Section 98.2. The Labor
Commissioner may apply to the clerk of the superior court to
amend a judgment that has been issued pursuant to a final order,
decision, or award to conform to the legal name of the defendant,
if it can be shown that proper service was made on the defendant
or begin delete his or her end delete begin insert its end insert agent.