BILL ANALYSIS                                                                                                                                                                                                    Ó






                                                                       AB 795


                                                                       Page A


          ASSEMBLY THIRD READING


          AB  
          795 (Low)


          As Amended  March 26, 2015


          Majority vote


           ------------------------------------------------------------------- 
          |Committee       |Votes |Ayes                 |Noes                 |
          |                |      |                     |                     |
          |                |      |                     |                     |
          |----------------+------+---------------------+---------------------|
          |Labor           |6-1   |Roger Hernández,     |Harper               |
          |                |      |Chu, Low, McCarty,   |                     |
          |                |      |Patterson, Thurmond  |                     |
          |                |      |                     |                     |
          |----------------+------+---------------------+---------------------|
          |Appropriations  |17-0  |Gomez, Bigelow,      |                     |
          |                |      |Bonta, Calderon,     |                     |
          |                |      |Chang, Daly, Eggman, |                     |
          |                |      |Gallagher,           |                     |
          |                |      |                     |                     |
          |                |      |                     |                     |
          |                |      |Eduardo Garcia,      |                     |
          |                |      |Gordon, Holden,      |                     |
          |                |      |Jones, Quirk,        |                     |
          |                |      |Rendon, Wagner,      |                     |
          |                |      |Weber, Wood          |                     |
          |                |      |                     |                     |
          |                |      |                     |                     |
           ------------------------------------------------------------------- 













                                                                       AB 795


                                                                       Page B


          SUMMARY:  Requires the Department of Industrial Relations (DIR) to  
          submit a report to the Legislature the amount of time it takes for  
          wage claims to receive a preliminary hearing date.


          EXISTING LAW authorizes the Labor Commissioner from DIR to  
          investigate and enforce labor laws and orders of the Industrial  
          Welfare Commission (IWC) that, among other things, include wage  
          claims.  Also, provides for criminal and civil penalties for  
          violations of statutes and orders of the IWC regarding payment of  
          wages.


          FISCAL EFFECT:  According to Assembly Appropriations Committee,  
          minor absorbable costs to the DIR to produce and submit the  
          report. 


          COMMENTS:  According to a 2013 report "Winning Wage Justice" by  
          the National Employment Law Project (NELP) shortchanging workers  
          of the wages they are owed - wage theft - is becoming a defining  
          trend of the 21st century labor market.  It takes many forms for  
          workers, including being paid less than the minimum wage or other  
          agreed upon wage, working "off-the-clock" without pay, getting  
          less than time-and-a half for overtime hours, having tips stolen,  
          being misclassified as an "independent contractor" instead of an  
          employee and underpaid, having illegal deductions taken out of  
          paychecks, or simply not being paid at all.  It spans a number of  
          industries as well.


          The wage theft crisis in this state is well-documented.  A recent  


















                                                                       AB 795


                                                                       Page C


          University of California, Los Angeles (UCLA) study<1> reported  
          that an estimated $26 million in wages per week are stolen from  
          low-wage workers in Los Angeles County alone.  Adding to the  
          crisis are the backlogs clogging the timely processing of wage  
          claim hearings for impacted workers.  


          Wage Claims Adjudication


          As the largest unit within the Division of Labor Standards  
          Enforcement (DLSE), Wage Claims Adjudication (WCA) handles over  
          30,000 new wage claims a year in 16 offices across the state.   
          Under California Labor Code Section 98, workers may file a claim  
          before the DLSE for unpaid wages (including minimum wage and  
          overtime), other compensation, and penalties through an  
          administrative claims process.  Commonly known as the "Berman"  
          process, this process has been heralded by the Legislature and the  
          courts as an indispensable alternative to costly litigation for  
          both workers and employers.  When a Berman claim is filed, WCA  
          staff typically hold a settlement conference and hearing on the  
          claim.  In addition, WCA staff administer wage claims brought by  
          garment workers under a separate statutorily-mandated process  
          (known as "AB 633" [(Steinberg), Chapter 554, Statutes of 1999])  
          for investigating and adjudicating garment claims.


          From 2009 to 2011 it was taking an average of seven months for a  
          wage claim to be heard.  The backlog for AB 633 claims was even  
          worse with more than half of those open cases filed two to three  
          years prior.  Prior to 2008, DLSE did not officially track the  
          time it took for a wage claim to be heard.  As a result of the  
          ----------------------------


          <1>


           Wage Theft and Workplace Violations in Los Angeles:  The Failure  
          of Employment and Labor Law for Low-Wage Workers, Milkman,  
          Gonzalez & Narro, Institute for Research on Labor and Employment,  
          UCLA (2010).








                                                                       AB 795


                                                                       Page D


          Labor Commissioner working to raise the bar on enforcement efforts  
          there has been a small reduction in the length of time for wage  
          claim to be heard.  The length of time has been reduced to between  
          five and six months for Berman claims to be heard.<2>


          Although the DLSE has made progress to reduce the delays for wage  
          claim hearings and AB 633 cases in the last two years, more work  
          needs to be done to further expedite the wage claims hearing  
          process.


          The author argues that wage theft exacts a heavy socio-economic  
          toll on workers, particularly low-wage workers and their  
          communities.  The proliferation of wage theft, particularly in the  
          underground economy, underscores the fact that effective, strong  
          enforcement of labor laws is needed now more than ever before, to  
          give working people a chance in our economy.  Abiding businesses  
          who play by the rules suffer the economic consequences when  
          government enforcement of labor laws is lackluster or nonexistent;  
          unscrupulous employers operating illegally are able to gain an  
          unfair competitive advantage and ignite a race to the bottom that  
          lowers even the most basic labor standards. 


          Additionally the author points out, when California workers are  
          not paid their earned wages, they have less money to spend for  
          basic necessities, which means less consumer spending to help spur  
          economic growth.  This adversely impacts not only local  
          communities and economies, but also the entire state.  The DLSE's  
          enforcement activities not only put hard-earned wages in the  
          pockets of workers, but also help generate tax revenue and  
          substantial monetary penalties for the state. 


          This bill requires DIR to submit a report to the Legislature  
          detailing the length of time it takes for wage claims to receive a  
          hearing date.



          ----------------------------


          <2> Division of Labor Standards Enforcement Report, May 2013 








                                                                       AB 795


                                                                       Page E






          Analysis Prepared by:                                               
                          Lorie Alvarez / L. & E. / (916) 319-2091  FN:  
          0000572