BILL ANALYSIS Ó AB 970 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 970 (Nazarian) As Amended August 24, 2015 Majority vote -------------------------------------------------------------------- |ASSEMBLY: |48-26 |(May 18, 2015) |SENATE: | |(August 31, | | | | | |25-14 |2015) | | | | | | | | | | | | | | | -------------------------------------------------------------------- Original Committee Reference: L. & E. SUMMARY: Makes a number of changes related to the citation authority of the Labor Commissioner. The Senate amendments: 1)Specify that in a jurisdiction where a local entity has the legal authority to issue a citation against an employer for a violation of any applicable local minimum wage or overtime law, the Labor Commissioner, pursuant to a request from the local entity, may issue a citation against the employer. 2)Specify that if the Labor Commissioner issues a citation, the local entity shall not cite the employer for the same violation. AB 970 Page 2 3)Provide that this does not change the applicability of local minimum wage laws to any entity. FISCAL EFFECT: According to the Senate Appropriations Committee, the Department of Industrial Relations would incur ongoing costs of $125,000 (special funds) to implement the provisions of this bill. COMMENTS: This bill is sponsored by the California Rural Legal Assistance Foundation (CRLAF). They note that Governor Brown recently has signed several new statutes into law that addressed some of the weaknesses or gaps in the Labor Commissioner's legal authority to effectively enforce wage laws in a field investigation or to fully adjudicate wage related claims in a Berman administrative wage claim hearing. They argue that this bill closes two other important gaps in the Labor Commissioner's field enforcement authority and will strengthen her efforts to stop wage theft. 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. A very common violation of this provision involves illegal charges for tools or equipment necessary to perform the job, but which are deducted from workers' pay notwithstanding. CRLAF states 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, 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. AB 970 Page 3 Existing law provides a legal framework for enforcement of state minimum wage and overtime wage requirements. However, the sponsor states 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. CRLAF contends 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. 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. As noted above, 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. 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. In addition, 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 AB 970 Page 4 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. Analysis Prepared by: Ben Ebbink / L. & E. / (916) 319-2091 FN: 0001518