BILL ANALYSIS Ó
SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS
Senator Tony Mendoza, Chair
2015 - 2016 Regular
Bill No: AB 970 Hearing Date: June 10,
2015
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|Author: |Nazarian |
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|Version: |April 15, 2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Deanna Ping |
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Subject: Labor Commissioner: enforcement of employee claims.
KEY ISSUE
Should the Legislature authorize the Labor Commissioner to issue
a citation to enforce local minimum wage and overtime laws?
Should the Legislature authorize the Labor Commissioner to issue
a citation against an employer or person acting on behalf of an
employer for violations of existing law related to
reimbursements for expenses?
ANALYSIS
Existing law 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.
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
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wages owed, plus interest.
(Labor Code §§ 98 & 98.2)
Existing law sets civil penalties for any employer or other
person acting on behalf of an employer who violates, or causes
to be violated, a section of this chapter or any provision
regulating hours and days of work in any order of the Industrial
Welfare Commission ranging from $50 upon first violation for
each underpaid employee for each pay period to $100 for
subsequent violations. (Labor Code §558)
Existing law states that if upon inspection or investigation the
Labor Commissioner determines that a person had paid or caused
to be paid a wage for overtime work in violation of provisions
relating to hours and days of work in any order of the
Industrial Welfare Commission, the Labor Commissioner may issue
a citation. (Labor Code §558)
Existing law states that the minimum wage for employees fixed by
the commission is the minimum wage to be paid to employees, and
the payment of a less wage than the minimum is unlawful. (Labor
Code §1197)
Existing law provides that any employer who pays an employee a
wage less than the minimum fixed by the commission shall be
subject to a civil penalty, restitution of wages, liquidated
damages payable to the employee, and any applicable penalties.
(Labor Code §1197.1)
Existing law states that if upon inspection or investigation the
Labor Commissioner determines that a person had paid or caused
to be paid a wage less than the minimum wage the Labor
Commissioner may issue a citation. (Labor Code §1197.1)
Existing law states that an employer shall indemnify (or
compensate) his or her employee for all necessary expenditures
or losses incurred by the employee in direct consequence of the
discharge of his or her duties, or of his or her obedience to
the directions of the employer, even though unlawful, unless the
employee at the time of obeying the directions believed them to
be harmful. (Labor Code §2802)
This bill :
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1)Provides that, if upon inspection or investigation the Labor
Commissioner determines that a person has violated overtime
requirements of existing law, including "any applicable local
overtime law," the Labor Commissioner may issue a citation.
2)Provides that, if upon inspection or investigation, the Labor
Commissioner determines that a person has paid less than the
minimum wage under applicable state or local law, the Labor
Commissioner may issue a citation.
3)States that the Labor Commissioner shall not issue a citation
against an employer for a violation of any applicable local
overtime or minimum wage law if the local entity with
jurisdiction in the matter has cited or has initiated an
investigation against the employer for the same violation.
4)Authorizes the Labor Commissioner to issue a citation against
an employer or person acting on behalf of an employer for
violations of existing law related to reimbursement
obligations for expenses.
COMMENTS
1. Need for this bill?
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
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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.
Labor Code Section 558, 1197, and 1197.1, provide a legal
framework for enforcement of state minimum wage and overtime
wage requirements. Local municipalities, such as San Francisco,
Oakland, Berkeley, and San Jose, have implemented local living
wage laws.
According to the author, current law does not specify that
recovery of local minimum wage or overtime wage requirement owed
to a worker can be included in the Labor Commissioner/Bureau of
Field Enforcement minimum wage citation process and states that
higher minimum wage and indemnity charges can only be recovered
by a worker either in a civil action or via a Berman hearing.
The author notes that this bill allows the Labor Commissioner to
issue a citation for employer violations of illegal tool or
equipment deductions and encourages compliance with higher local
living wage laws by giving the Labor Commissioner the discretion
to cite when finding violations of those laws. The author argues
that AB 970 is intended to eliminate significant gaps in the
Labor Commissioner's citation authority and promotes government
efficiency in labor law enforcement, strengthens the deterrent
effect of its enforcement efforts, and increases the probability
of workers recovering unpaid wages. The author also notes that
AB 970 ensures that workers have the same monetary relief
whether they pursue their claims administratively, by way of the
courts or via the Labor Commissioner's existing authority.
2. Proponent Arguments :
According to proponents, existing Labor Code Section 2802
requires an employer to indemnify his or her employees for "all
necessary expenditures or losses" incurred by the employee in
direct consequence of his or her duties. Proponents note that a
very common violation of this provision involves illegal charges
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for tools or equipment necessary to perform the job, but which
are deducted from workers' pay notwithstanding. Proponents note
that under current law, workers may file a civil action to
recover these illegal deductions from their pay, or may seek to
recover them in a Berman wage claim hearing. However, proponents
argue that the Labor Commissioner cannot issue a citation for
this violation, even if she determines upon inspection or
investigation that the charges are illegal and have not been
repaid to the worker -this bill would specifically authorize the
Labor Commissioner to issue citations in such situations.
However, proponents state that as more local California
authorities have enacted higher minimum wage laws applicable to
the lowest paid workers in their jurisdictions, the Labor
Commissioner has been processing claims to enforce these higher
wage requirements in Berman wage hearings. They argue that this
bill recognizes this evolution and authorizes the Labor
Commissioner to also issue a citation when she determines an
employer has violated an applicable local wage law.
Lastly, proponents contend that this bill is likely to make a
significant contribution to encouraging compliance with higher
local living wage laws by giving the Labor Commissioner the
discretion to cite when she finds violations of these laws.
Proponents argue that employers would be subject to the same
citation amounts, and have the same appeal rights, as would
apply if they were cited for a violation of state minimum wage
or overtime requirements. Proponents note that the Labor
Commissioner has been enforcing these local wage requirements in
her wage claim hearings; this bill simply extends authority to
cite when violations are encountered in the field.
3. Opponent Arguments :
A coalition of employer groups, including the California Chamber
of Commerce, opposes this measure, stating that it will subject
employers to layers of penalties and enforcement efforts,
increased annual assessments, and a limited opportunity to
appeal.
First, opponents note that beginning in 2009 the costs of state
labor law enforcement were primarily transferred from the
General Fund to private sector employers through annual
assessments on workers' compensation premiums, which are based
upon the employers' payroll. Accordingly, any increase in the
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Labor Commissioner's jurisdiction will likely result in an
increase to all employers' annual assessments. Employers
statewide should not have to pay for these increased assessments
for the enforcement of local laws where they are not located.
Lastly, opponents state that under the citation process, an
employer challenging a citation can request an administrative
hearing to contest the citation and may only challenge the
administrative ruling pursuant to a writ of mandate. A writ of
mandate limits the superior court's scope of review of the
evidence and arguments the court may consider for purposes of
challenging the administrative ruling. Comparatively, in wage
claim adjudication through the Labor Commissioner's office, an
employer has a right to a trial de novo to superior court if the
employer wants to challenge an administrative ruling, which
provides the court with unlimited review of the underlying
complaint as well as any new issues, evidence or arguments
raised on appeal. Accordingly, to the extent the Labor
Commissioner is resolving any local minimum wage violations
through the wage claim process, that process provides a fairer
opportunity for an employer to appeal a ruling it believes was
issued in error rather than the citation process.
4. Prior Legislation :
AB 1723 (Nazarian) of 2014 - authorized the Labor Commissioner
to include "waiting time" penalties in wage citations
AB 442 (Nazarian), Chapter 735, Statutes of 2013 - authorized
the Labor Commissioner to collect liquidated damages from an
employer who pays an employee less than minimum wage.
SUPPORT
California Rural Legal Assistance Foundation (Sponsor)
Bet Tzedek Legal Services
California Immigrant Policy Center
California Labor Federation, AFL-CIO
California Nurses Association
Maintenance Cooperation Trust Fund
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OPPOSITION
California Chamber of Commerce
Associated Builders and Contractors of California
Association General Contractors
CAWA - Representing the Automotive Parts Industry
California Association for Health Services at Home
California Bankers Association
California Employment Law Council
California Grocers Association
California Manufacturers and Technology Association
California New Car Dealership Association
California Pool & Spa Association
California Restaurant Association
California Trucking Association
Chamber of Commerce Mountain View
El Centro Chamber of Commerce & Visitors Bureau
Fullerton Chamber of Commerce
Greater Conejo Valley Chamber of Commerce
Greater Fresno Area Chamber of Commerce
Lake Tahoe South Shore Chamber of Commerce
National Federation of Independent Business
Palm Desert Area Chamber of Commerce
Redondo Beach Chamber of Commerce and Visitors Bureau
San Jose Silicon Valley Chamber of Commerce
Santa Clara Chamber of Commerce & Convention-Visitor's Bureau
Santa Maria Valley Chamber of Commerce Visitor and Convention
Bureau
Simi Valley Chamber of Commerce
South Bay Association of Chambers of Commerce
Western Electrical Contractors Association
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