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California - AB 2187 - Employment: payment of wages
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Introduced
SENATE PASSED
HOUSE PASSED
SIGNED BY GOVERNOR

1/22/2009
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Policy Becomes Law


  • Policy Overview
  • An act to add Section 1199.6 to the Labor Code, relating to employment.

    BILL NUMBER: AB 2187	INTRODUCED
    BILL TEXT
    INTRODUCED BY Assembly Member Arambula

    FEBRUARY 18, 2010

    An act to add Section 1199.6 to the Labor Code, relating to
    employment.
    LEGISLATIVE COUNSEL`S DIGEST
    AB 2187, as introduced, Arambula. Employment: payment of wages.
    Existing law makes it a misdemeanor for a person or employer who,
    having the ability to pay, willfully refuses to pay wages to due to a
    current employee, an employee who has resigned, or an employee who
    has been discharged. Under existing law, a person found guilty of
    this crime must pay restitution to the employee to whom wages are
    owed. Existing law also imposes civil penalties against a person or
    employer who wrongfully fails to pay wages.
    This bill would create a separate prohibition against a person or
    an employer who, having the ability to pay, willfully fails to pay
    all wages due to an employee who has been discharged or who has quit
    within 90 days of the date of the wages becoming due and would impose
    additional criminal penalties for such conduct. The bill would also
    require a person or employer who violates these provisions to pay
    restitution in an amount equal to the amount of unpaid wages to the
    aggrieved employee and prosecution costs, upon conviction becoming
    final.
    Because this bill would create a new crime, it would impose a
    state-mandated local program.
    The California Constitution requires the state to reimburse local
    agencies and school districts for certain costs mandated by the
    state. Statutory provisions establish procedures for making that
    reimbursement.
    This bill would provide that no reimbursement is required by this
    act for a specified reason.
    Vote: majority. Appropriation: no. Fiscal committee: yes.
    State-mandated local program: yes.
    THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

    SECTION 1. The Legislature finds and declares the following:
    (a) Many criminal fines and other penalties and California`s
    statutory provisions that relate to the payment of wages have not
    been strengthened in decades and lag behind other jurisdictions,
    which have both increased criminal penalties and enacted civil
    remedies to encourage employers to pay wages promptly when due.
    (b) The development of a single statutory scheme addressing the
    theft of wages and imposing significant penalties for committing such
    theft sends an appropriate message to prosecutors to aggressively
    pursue violators and ensures that restitution of unpaid wages to
    aggrieved employees is a central focus of prosecutions for theft of
    wages.
    SEC. 2. Section 1199.6 is added to the Labor Code, to read:
    1199.6. (a) In addition to any other penalty imposed, an employer
    or other person acting either individually or as an officer, agent,
    or employee of another person is guilty of a misdemeanor and is
    punishable by a fine of not less than one thousand dollars ($1,000)
    and not more than ten thousand dollars ($10,000), or by imprisonment
    in a county jail for not more than six months, or by both, who,
    having the ability to pay, willfully fails to pay all wages due to an
    employee who has been discharged or who has quit within 90 days of
    the date that those wages became due.
    (b) Upon a finding of a violation of subdivision (a), the
    violating employer or person shall pay restitution to the aggrieved
    employee in an amount equal to the total amount of unpaid wages.
    (c) An employer or person who violates subdivision (a), upon
    conviction becoming final and unappealable, shall pay all reasonable
    costs of prosecution to the entity that prosecutes. For purposes of
    this subdivision, "conviction" means a verdict of guilty or a plea of
    guilty or nolo contendere.
    SEC. 3. No reimbursement is required by this act pursuant to
    Section 6 of Article XIII B of the California Constitution because
    the only costs that may be incurred by a local agency or school
    district will be incurred because this act creates a new crime or
    infraction, eliminates a crime or infraction, or changes the penalty
    for a crime or infraction, within the meaning of Section 17556 of the
    Government Code, or changes the definition of a crime within the
    meaning of Section 6 of Article XIII B of the California
    Constitution.
  • Summary/Fact Sheet Title
  • No summary detail available
  • View Full Policy
  • BILL NUMBER: AB 2187 INTRODUCED
    BILL TEXT
    INTRODUCED BY Assembly Member Arambula

    FEBRUARY 18, 2010

    An act to add Section 1199.6 to the Labor Code, relating to
    employment.
    LEGISLATIVE COUNSEL`S DIGEST
    AB 2187, as introduced, Arambula. Employment: payment of wages.
    Existing law makes it a misdemeanor for a person or employer who,
    having the ability to pay, willfully refuses to pay wages to due to a
    current employee, an employee who has resigned, or an employee who
    has been discharged. Under existing law, a person found guilty of
    this crime must pay restitution to the employee to whom wages are
    owed. Existing law also imposes civil penalties against a person or
    employer who wrongfully fails to pay wages.
    This bill would create a separate prohibition against a person or
    an employer who, having the ability to pay, willfully fails to pay
    all wages due to an employee who has been discharged or who has quit
    within 90 days of the date of the wages becoming due and would impose
    additional criminal penalties for such conduct. The bill would also
    require a person or employer who violates these provisions to pay
    restitution in an amount equal to the amount of unpaid wages to the
    aggrieved employee and prosecution costs, upon conviction becoming
    final.
    Because this bill would create a new crime, it would impose a
    state-mandated local program.
    The California Constitution requires the state to reimburse local
    agencies and school districts for certain costs mandated by the
    state. Statutory provisions establish procedures for making that
    reimbursement.
    This bill would provide that no reimbursement is required by this
    act for a specified reason.
    Vote: majority. Appropriation: no. Fiscal committee: yes.
    State-mandated local program: yes.
    THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

    SECTION 1. The Legislature finds and declares the following:
    (a) Many criminal fines and other penalties and California`s
    statutory provisions that relate to the payment of wages have not
    been strengthened in decades and lag behind other jurisdictions,
    which have both increased criminal penalties and enacted civil
    remedies to encourage employers to pay wages promptly when due.
    (b) The development of a single statutory scheme addressing the
    theft of wages and imposing significant penalties for committing such
    theft sends an appropriate message to prosecutors to aggressively
    pursue violators and ensures that restitution of unpaid wages to
    aggrieved employees is a central focus of prosecutions for theft of
    wages.
    SEC. 2. Section 1199.6 is added to the Labor Code, to read:
    1199.6. (a) In addition to any other penalty imposed, an employer
    or other person acting either individually or as an officer, agent,
    or employee of another person is guilty of a misdemeanor and is
    punishable by a fine of not less than one thousand dollars ($1,000)
    and not more than ten thousand dollars ($10,000), or by imprisonment
    in a county jail for not more than six months, or by both, who,
    having the ability to pay, willfully fails to pay all wages due to an
    employee who has been discharged or who has quit within 90 days of
    the date that those wages became due.
    (b) Upon a finding of a violation of subdivision (a), the
    violating employer or person shall pay restitution to the aggrieved
    employee in an amount equal to the total amount of unpaid wages.
    (c) An employer or person who violates subdivision (a), upon
    conviction becoming final and unappealable, shall pay all reasonable
    costs of prosecution to the entity that prosecutes. For purposes of
    this subdivision, "conviction" means a verdict of guilty or a plea of
    guilty or nolo contendere.
    SEC. 3. No reimbursement is required by this act pursuant to
    Section 6 of Article XIII B of the California Constitution because
    the only costs that may be incurred by a local agency or school
    district will be incurred because this act creates a new crime or
    infraction, eliminates a crime or infraction, or changes the penalty
    for a crime or infraction, within the meaning of Section 17556 of the
    Government Code, or changes the definition of a crime within the
    meaning of Section 6 of Article XIII B of the California
    Constitution.



  • View History
  •           

               COMPLETE BILL HISTORY

              

              BILL NUMBER : A.B. No. 2187

              Latest Vote

              AUTHOR : Arambula

              TOPIC : Employment: payment of wages.

              

              TYPE OF BILL :

               Active

  • View Analysis
  • 2010-04-05 00:00:00

    BILL ANALYSIS                                                                                                                                                                                                    
    AB 2187
    Page A
    Date of Hearing: April 7, 2010

    ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
    Sandre Swanson, Chair
    AB 2187 (Arambula) - As Amended: March 24, 2010

    SUBJECT : Employment: payment of wages.

    SUMMARY : Increases criminal penalties for willful failure to
    pay wages. Specifically, this bill :

    1 Establishes a misdemeanor penalty for an employer or person
    who willfully fails to pay all wages due to an employee who
    has been discharged or who has quit within 90 days of the date
    wages are due.

    2)Makes the aforementioned misdemeanor punishable by a fine of
    not less than $1,000 and not more than $10,000, or by
    imprisonment in a county jail for not more than six months, or
    both.

    3)Requires an employer found guilty of the aforementioned
    misdemeanor to pay, in addition to any criminal fines,
    restitution to the aggrieved employee in an amount equal to
    the total amount of unpaid wages.

    4)Requires an employer or person, upon conviction becoming
    final, to pay all reasonable costs of prosecution to the
    entity that prosecutes. "Conviction" is defined as a verdict
    of guilty or a plea of guilty or nolo contendere.

    5)Makes related legislative findings and declarations.

    EXISTING LAW establishes misdemeanor criminal penalties for
    various violations of the Labor Code, including the willful
    failure to pay wages due.

    FISCAL EFFECT : Unknown

    COMMENTS :

    This measure is sponsored by the California Rural Legal
    Assistance Foundation (CRLAF), who argues that it will
    appropriately strengthen the hands of prosecutors who take on
    theft of wages cases in the future, and will make certain that


    AB 2187
    Page B
    restitution of all unpaid wages to aggrieved employees is
    central to these prosecutions.

    Existing law establishes misdemeanor criminal penalties for
    various violations of the Labor Code, including the willful
    failure to pay wages due (See, e.g., Labor Code section 216).
    However, for the reasons discussed below, the sponsor contends
    that these current criminal penalties are inadequate.

    Moreover, Penal Code section 532(a) provides as follows:

    "Every person who knowingly?defrauds any other person of
    money, labor, or
    property...and thereby fraudulently gets possession of
    money or property, or
    obtains the labor or service of another, is punishable in
    the same manner and
    to the same extent as for larceny of the money or property
    so obtained."

    California is one of only a handful of states that includes
    "labor" within its definition of theft<1>. Despite this fact,
    worker advocates contend that "theft of labor" is rarely, if
    ever, prosecuted as a crime. Potential reasons for the lack of
    criminal prosecution include, but are not limited to, the
    following: (1) an assumption that "theft of labor" is a civil
    matter best handled by the Labor Commissioner; (2) the
    underreporting of wage theft for a variety of reasons; (3) the
    fact that "theft of labor" requires proof of specific intent and
    must be proven beyond a reasonable doubt; and (4) heavy caseload
    of local prosecutors resulting in prioritization of other cases.

    Recent Studies on the Prevalence of "Theft of Wages"

    Various recent studies have highlighted concerns about alleged
    widespread "theft of wages" in the United States and in
    California, particularly in the underground economy.
    ---------------------------

    ---------------------------
    <1> Rita J. Verga, An Advocate`s Toolkit: Using Criminal "Theft
    of Service" Laws to Enforce Workers` Right to Be Paid, 8 N.Y.
    City L. Rev. 283 (2005) at n. 4.

    AB 2187
    Page C





    AB 2187
    Page D
    For example, in 2009 the Ford Foundation sponsored a study<2>
    that surveyed 4,387 workers in low-wage industries in the three
    largest U.S. cities - Chicago, Los Angeles and New York City.
    The study revealed that 26 percent of workers in the sample were
    paid less than the legally required minimum wage, and 60 percent
    of these workers were underpaid by more than $1 per hour. In
    addition, 76 percent of the respondents who worked overtime in
    the previous week were not paid the legally required overtime
    rate by their employers.

    Another study<3> focused on a survey of 1,815 workers in Los
    Angeles County. The survey found that low-wage workers in Los
    Angeles regularly experience violations of basic laws that
    mandate a minimum wage and overtime pay and are frequently
    forced to work off the clock or during their breaks. Other
    violations documented in the survey include lack of required
    payroll documentation, being paid late, tip stealing and
    employer retaliation.

    The survey also revealed that the various forms of nonpayment
    and underpayment of wages take a heavy monetary toll on workers
    and their families. Respondents who experienced a pay-based
    violation in the previous work week lost an average of $39.81
    out of average weekly earnings of $318.00 (or 12.5 percent).
    Assuming a full-year work schedule, these workers lost an
    average of $2,070.00 annually out of total earnings of
    $16,536.00<4>.

    The survey estimated that, in a given week, 654,914 workers in
    Los Angeles County suffer at least one pay-based violation.
    Extrapolating from this figure, front-line workers in low-wage
    industries lose more than $26.2 million per week as a result of
    employment and labor law violations<5>.

    The authors of the report underscored the economic impact of
    these violations as follows:
    ---------------------------
    <2> "Broken Laws, Unprotected Workers: Violations of Employment
    and Labor Laws in America`s Cities." Center for Urban Economic
    Development, National Employment Law Project, UCLA Institute for
    Research on Labor and Employment (2009).
    <3> Milkman, Ruth, Ana Luz Gonzalez and Victor Narro. "Wage
    Theft and Workplace Violation in Los Angeles: The Failure of
    Employment and Labor Law for Low-Wage Workers." UCLA Institute
    for Research on Labor and Employment (2010).
    <4> Id . at 4.
    <5> Id . at 53.

    AB 2187
    Page E

    "Wage theft not only depresses the already meager earnings
    of low-wage workers,
    it also adversely impacts their communities and the local
    economies of which they
    are part. Low-income families spend the bulk of their
    earnings on basic necessities
    like food, clothing and housing. Their expenditures
    circulate through local economies,
    supporting businesses and jobs. Wage theft robs local
    communities of this spending
    and ultimately limits economic growth<6>."

    Both of the aforementioned studies make the following public
    policy recommendations to address these issues: (1) strengthen
    government enforcement of existing employment and labor laws;
    (2) update legal standards; and (3) establish equal status for
    immigrants to ensure that they have the full protection and
    remedies available under employment and labor laws.

    Recent Enforcement Data in California

    As a preliminary manner, it is important to note the impact of
    the underground economy generally in California. In 2009, the
    Economic and Employment Enforcement Coalition (EEEC) stated that
    the underground economy in California has been conservatively
    estimated to amount to over $6.5 billion in just unreported
    taxable wage income every year (California`s Tax Gap, 2005
    California Legislative Analyst`s Office). This $6.5 billion
    figure significantly understates the problem given that it does
    not fully take into consideration the failure of underground
    businesses to fund the unemployment tax program, the workers`
    compensation system, employer funded worker safety programs, and
    similar programs<7>.

    The Bureau of Field Enforcement (BOFE) within the Division of
    Labor Standards Enforcement (BOFE) investigates complaints and
    takes enforcement actions to ensure employees are not being
    required or permitted to work under unlawful conditions.
    Enforcement action taken by BOFE investigators involves the
    enforcement of child labor laws; the requirement of employers to
    ---------------------------
    <6> Id . at 54.
    <7> "Report to the California Joint Legislative Budget Committee
    and Director of the California Department of Finance." Economic
    and Employment Enforcement Coalition (September 2009).

    AB 2187
    Page F
    carry workers` compensation insurance coverage; audits of
    payroll records, collection of unpaid minimum wages, overtime,
    as well as prevailing and other unpaid wages; the issuance of
    civil and criminal citations; the confiscation of illegally
    manufactured garments; and injunctive relief to preclude further
    violations of the law.

    In calendar year 2008 (the most recent year for which data is
    available), the BOFE conducted a total of 9,413 inspections,
    resulting in a total of 5,521 citations<8>. The largest single
    source of violations and citations was the failure to carry
    workers` compensation insurance with 2,738 citations in 2008.

    In 2008, the BOFE issued 135 citations for minimum wage
    violations and 130 citations for overtime violations, or 265
    citations for the two categories combined. By comparison, in
    2008 the BOFE issued 274 citations to car washes for failure to
    register and 392 citations for child labor violations<9>.

    In 2006, the BOFE issued only 32 citations for minimum wage
    violations and 52 citations for overtime violations<10>.

    ARGUMENTS IN SUPPORT

    As mentioned above, this measure is sponsored by the California
    Rural Legal Assistance Foundation (CRLAF), who argues that it
    will appropriately strengthen the hands of prosecutors who take
    on theft of wages cases in the future, and will make certain
    that restitution of all unpaid wages to aggrieved employees is
    central to these prosecutions.

    CRLAF points out that he Division of Labor Standards Enforcement
    (DLSE) has fewer authorized positions for enforcement staff in
    2010 than it had in 1980, and has a demonstrably poor record of
    either citing for minimum wage or overtime violations or
    collecting civil money penalty assessments for these violations,
    both of which undercut the deterrent effect of the Labor Code`s
    civil penalty provisions. CRLAF states that in 2008, only 265
    employers in the entire state of California were cited for
    ---------------------------
    <8> "2008 Annual Report on the Effectiveness of the Bureau of
    Field Enforcement." Department of Industrial Relations (DIR).
    <9> Id . at 2.
    <10> "2006 Annual Report on the Effectiveness of the Bureau of
    Field Enforcement." Department of Industrial Relations (DIR).


    AB 2187
    Page G
    violating minimum wage or overtime pay laws. DLSE assessed
    $884,373 in penalties for these violations but collected only
    $261,520 (less than 30 cents on the dollar).

    CRLAF notes that various provisions of the Labor Code make it a
    misdemeanor to fail to comply with wage payment laws. However,
    CRLAF argues that none of these statutes: 1) impose any
    additional criminal sanctions if an unscrupulous employer fails
    to pay wages that are due within a reasonable period of time; 2)
    impose a significant minimum fine for such misconduct; 3)
    require restitution to the employee of all unpaid wages; or 4)
    require a guilty party to pay the reasonable costs of a
    successful prosecution. In addition, CRLAF states that various
    provisions of the California Constitution and the Penal Code
    contain "victim`s rights" restitutionary protections including a
    mandatory "restitution fine" (for misdemeanor convictions,
    ranging from not less than $100 to not more than $1,000) and
    mandatory "full restitution" for an injured victim, but in both
    instances a court has discretion not to assess any fine or not
    to order full restitution if it finds that there are "compelling
    and extraordinary" reasons to do so and states them on the
    record.

    Therefore, CRLAF contends that this bill addresses each of the
    four weaknesses identified in the Labor Code`s provisions by: 1)
    making it a misdemeanor to fail to pay wages due, within 90
    days, to an employee who quits or is discharged; 2) setting a
    minimum fine of $1,000 and a maximum fine of $10,000 for this
    violation; 3) requiring, in addition to the fine, full
    restitution to each employee equal to the total amount of wages
    not paid; and 4) requiring payment of prosecution costs.

    ARGUMENTS IN OPPOSITION

    Opponents, including the California Chamber of Commerce, argue
    that this bill could make into criminals employers with
    legitimate disputes over wage claims. They contend that the
    term "willfully fails" is vague and undefined, so it could be
    construed to apply to wage disputes that are often not resolved
    until long after 90 days. For example, if an employer and
    employee disagree over the amount of wages due, a Labor
    Commissioner determination could take longer than 90 days.

    Opponents also argue that this bill could also be construed to
    criminalize almost any wage-based lawsuit, such as overtime and


    AB 2187
    Page H
    meal and rest period class actions, that might affect whether an
    employee was paid "all wages due" at the end of employment.
    These lawsuits have statutes of limitation from one to three or
    more years and could also be pending in the courts for years in
    appeals. The threat of criminal prosecution under this bill
    could unfairly force an employer to drop an otherwise reasonable
    defense against a civil action.

    Moreover, opponents express concern that jail time and fines
    could be imposed against individual employees who were following
    the directions of the employer since the employer`s "agents" and
    "employees" are subject to liability under this bill. This
    might include all the employees in the payroll department and
    all the way up the supervisorial chain.
    Finally, opponents question the necessity of this bill, since
    existing law requires the employer to make the employee whole
    and imposes stiff penalties of varying amounts, depending on the
    wage dispute at issue, when the employer fails to pay wages due.
    Moreover, current criminal laws outlaw theft, which permits
    prosecution of ill-intentioned employers who steal money from
    their employees.

    REGISTERED SUPPORT / OPPOSITION :

    Support

    California Conference Board of the Amalgamated Transit Union
    California Conference of Machinists
    California Labor Federation, AFL-CIO
    California Nurses Association/National Nurses Organizing
    Committee
    California Rural Legal Assistance Foundation (sponsor)
    California Teamsters Public Affairs Council
    Engineers and Scientists of California, IFPTE Local 20
    International Longshore and Warehouse Union
    Jockeys` Guild
    Professional and Technical Engineers, IFPTE Local 21
    UNITE HERE!
    United Food and Commercial Workers Region 8 States Council

    Opposition

    California Chamber of Commerce
    California Construction and Industrial Materials Association
    California Employment Law Council


    AB 2187
    Page I
    California Farm Bureau Federation
    California Framing Contractors Association
    California Grocers Association
    California Hospital Association
    California Independent Grocers Association
    California Retailers Association
    Western Electrical Contractors Association
    Western Growers Association


    Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091


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