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AB-2613 Failure to pay wages: penalties.(2017-2018)

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Date Published: 04/09/2018 09:00 PM
AB2613:v98#DOCUMENT

Amended  IN  Assembly  April 09, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 2613


Introduced by Assembly Member Reyes

February 15, 2018


An act to amend Section 204 of Sections 1194.2 and 1197.1 of, and to repeal and add Section 210 of, the Labor Code, relating to employment.


LEGISLATIVE COUNSEL'S DIGEST


AB 2613, as amended, Reyes. Failure to pay wages: semimonthly payments: penalties.
Existing law provides for a civil penalty, in addition to, and entirely independent and apart from other penalties, on every person who fails to pay the wages of each employee, as specified, and requires the Labor Commissioner to recover that penalty. Existing law requires that a specified percentage of the penalty recovered under that provision be paid into a fund within the Labor and Workforce Development Agency dedicated to educating employers about state labor laws and that the remainder be paid into the State Treasury to the credit of the General Fund.
This bill would repeal those provisions and instead make an employer or other person acting individually or as an officer, agent, or employee of another person who fails to pay or causes a failure to pay specified wages of each employee subject to a penalty of $200, payable to each affected employee, per pay period where the wages due are not paid on time, as specified. The bill would provide that the additional penalty does not apply to the failure to pay the final wages of an employee who is discharged or quits.
Existing law makes an employer or other person acting individually or as an officer, agent, or employee of another person who fails to pay or causes a failure to pay an employee a wage less than the minimum wage subject to citation by the Labor Commissioner, a civil penalty, restitution of wages, liquidated damages, and certain other applicable penalties.
This bill would specify that those remedies also apply where an employer or other person acting individually or as an officer, agent, or employee of another person fails to pay or causes a failure to timely pay an employee the regular wages due to that employee. The bill would make other related conforming changes.

Existing law requires that employers pay wages to their employees, twice per calendar month, on days designated in advance as regular paydays. However, employees defined as executive, administrative, or professional may be paid once per month. Existing law makes a violation of these provisions a misdemeanor and subject to civil penalties recovered by the Labor Commissioner.

This bill would additionally impose specified penalties, payable to the affected employees, on employers who violate these provisions. The bill would require those penalties to be recovered by the Labor Commissioner as part of a hearing held to recover unpaid wages and penalties or by an employee in a civil action for wages.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Section 210 of the Labor Code is repealed.
210.

(a)In addition to, and entirely independent and apart from, any other penalty provided in this article, every person who fails to pay the wages of each employee as provided in Sections 201.3, 204, 204b, 204.1, 204.2, 205, 205.5, and 1197.5, shall be subject to a civil penalty as follows:

(1)For any initial violation, one hundred dollars ($100) for each failure to pay each employee.

(2)For each subsequent violation, or any willful or intentional violation, two hundred dollars ($200) for each failure to pay each employee, plus 25 percent of the amount unlawfully withheld.

(b)The penalty shall be recovered by the Labor Commissioner as part of a hearing held to recover unpaid wages and penalties pursuant to this chapter or in an independent civil action. The action shall be brought in the name of the people of the State of California and the Labor Commissioner and the attorneys thereof may proceed and act for and on behalf of the people in bringing these actions. Twelve and one-half percent of the penalty recovered shall be paid into a fund within the Labor and Workforce Development Agency dedicated to educating employers about state labor laws, and the remainder shall be paid into the State Treasury to the credit of the General Fund.

SEC. 2.

 Section 210 is added to the Labor Code, to read:

210.
 (a) An employer or other person acting individually or as an officer, agent, or employee of another person who fails to pay, or causes a failure to pay, wages of each employee as provided in Sections 201.3, 204, 204b, 204.1, 204.2, 205, 205.5, and 1197.5, shall be subject to a statutory penalty of two hundred dollars ($200), payable to each affected employee, per pay period where the wages due to an employee are not paid on time.
(b) The penalty in subdivision (a) shall be due and payable on the calendar day after the day for which wages unlawfully withheld were to be paid pursuant to Sections 201.3, 204, 204b, 204.1, 204.11, 204.2, 205, 205.5, or 207. The penalty in this section cannot be waived by agreement of the employee.
(c) The penalty in subdivision (a) shall be due and payable for any pay date in any pay period as set forth in Sections 201.3, 204, 204b, 204.1, 204.11, 204.2, 205, 205.5, or 207 provided that any wages owed from prior pay periods remain unpaid.
(d) A suit may be filed for these penalties at any time before the expiration of the statute of limitations on an action for the wages from which the penalties arise. Penalties may also be recovered in any action under Section 98, 98.3, 558, 1193.6, 1194, or 1197.1.
(e) Penalties under this section are in addition to, and entirely independent and apart from, any other damages or penalties provided for under this code. However, the penalties under this section shall not apply to failure to pay the final wages of an employee who is discharged or quits, for which penalties under Section 203 may be recovered.

SEC. 3.

 Section 1194.2 of the Labor Code is amended to read:

1194.2.
 (a) In any action under Section 98, 1193.6, 1194, or 1197.1 to recover wages 1197.1, because of the payment of a wage less than the minimum wage fixed by an order of the commission or by statute, or a wage less than the regular wages owed to an employee, when due an employee shall be entitled to recover liquidated damages in an amount equal to the wages unlawfully unpaid and interest thereon. Nothing in this subdivision shall be construed to authorize the recovery of liquidated damages for failure to pay overtime compensation. A suit may be filed for liquidated damages at any time before the expiration of the statute of limitations on an action for wages from which the liquidated damages arise.
(b) Notwithstanding subdivision (a), if the employer demonstrates to the satisfaction of the court or the Labor Commissioner that the act or omission giving rise to the action was in good faith and that the employer had reasonable grounds for believing that the act or omission was not a violation of any provision of the Labor Code relating to minimum wage, or an order of the commission, the court or the Labor Commissioner may, as a matter of discretion, refuse to award liquidated damages or award any amount of liquidated damages not exceeding the amount specified in subdivision (a).
(c) This section applies only to civil actions commenced on or after January 1, 1992.

SEC. 4.

 Section 1197.1 of the Labor Code is amended to read:

1197.1.
 (a) Any employer or other person acting either individually or as an officer, agent, or employee of another person, who pays or causes to be paid to any employee a wage less than the minimum fixed by an applicable state or local law, or by an order of the commission commission, or pays or causes to be paid a wage less than the regular wages owed to an employee when due, shall be subject to a civil penalty, restitution of wages, liquidated damages payable to the employee, and any applicable penalties imposed pursuant to Section 203 Sections 203 and 210 as follows:
(1) For any initial violation that is intentionally committed, one hundred dollars ($100) for each underpaid employee for each pay period for which the employee is underpaid. This amount shall be in addition to an amount sufficient to recover underpaid wages, liquidated damages pursuant to Section 1194.2, and any applicable penalties imposed pursuant to Section 203. Sections 203 and 210.
(2) For each subsequent violation for the same specific offense, two hundred fifty dollars ($250) for each underpaid employee for each pay period for which the employee is underpaid regardless of whether the initial violation is intentionally committed. This amount shall be in addition to an amount sufficient to recover underpaid wages, liquidated damages pursuant to Section 1194.2, and any applicable penalties imposed pursuant to Section 203. Sections 203 and 210.
(3) Wages, liquidated damages, and any applicable penalties imposed pursuant to Section 203, Sections 203 and 210, recovered pursuant to this section shall be paid to the affected employee.
(b) If, upon inspection or investigation, the Labor Commissioner determines that a person has paid or caused to be paid a wage less than the minimum under applicable law, or less than the regular wages owed to an employee when due, the Labor Commissioner may issue a citation to the person in violation. The citation may be served personally, in the same manner as provided for service of a summons as described in Chapter 4 (commencing with Section 413.10) of Title 5 of Part 2 of the Code of Civil Procedure, by certified mail with return receipt requested, or by registered mail in accordance with subdivision (c) of Section 11505 of the Government Code. Each citation shall be in writing and shall describe the nature of the violation, including reference to the statutory provision alleged to have been violated. The Labor Commissioner shall promptly take all appropriate action, in accordance with this section, to enforce the citation and to recover the civil penalty assessed, wages, liquidated damages, and any applicable penalties imposed pursuant to Section 203 Sections 203 and 210 in connection with the citation.
(c) (1) If a person desires to contest a citation or the proposed assessment of a civil penalty, wages, liquidated damages, and any applicable penalties imposed pursuant to Section 203 Sections 203 and 210 therefor, the person shall, within 15 business days after service of the citation, notify the office of the Labor Commissioner that appears on the citation of his or her appeal by a request for an informal hearing. The Labor Commissioner or his or her deputy or agent shall, within 30 days, hold a hearing at the conclusion of which the citation or proposed assessment of a civil penalty, wages, liquidated damages, and any applicable penalties imposed pursuant to Section 203 Sections 203 and 210 shall be affirmed, modified, or dismissed.
(2) The decision of the Labor Commissioner shall consist of a notice of findings, findings, and an order, all of which shall be served on all parties to the hearing within 15 days after the hearing by regular first-class mail at the last known address of the party on file with the Labor Commissioner. Service shall be completed pursuant to Section 1013 of the Code of Civil Procedure. Any amount found due by the Labor Commissioner as a result of a hearing shall become due and payable 45 days after notice of the findings and written findings and order have been mailed to the party assessed. A writ of mandate may be taken from this finding to the appropriate superior court. The party shall pay any judgment and costs ultimately rendered by the court against the party for the assessment. The writ shall be taken within 45 days of service of the notice of findings, findings, and order thereon.
(3) As a condition to filing a petition for a writ of mandate, the petitioner seeking the writ shall first post a bond with the Labor Commissioner equal to the total amount of any minimum wages, liquidated damages, and overtime compensation that are due and owing as determined pursuant to subdivision (b) of Section 558, as specified in the citation being challenged. The bond amount shall not include amounts for penalties. The bond shall be issued by a surety duly authorized to do business in this state, shall be issued in favor of unpaid employees, and shall ensure that the petitioner makes payments as set forth in this paragraph. If a decision is entered which affirms or modifies the amounts for wages, liquidated damages, or overtime compensation, the petitioner shall pay the amounts owed for the specified items included in a clerk’s judgment entered under subdivision (f) based on the decision, or pursuant to a court judgment in a writ of mandate proceeding under paragraph (2). If the request for a writ is withdrawn or dismissed without entry of judgment, the petitioner shall pay the amounts owed for the specified items pursuant to the citation, or the administrative decision if a pending writ of mandate is dismissed prior to a court decision, unless the parties have executed a settlement agreement for payment of some other amount. In the case of a settlement agreement, the petitioner shall pay the amount he or she is obligated to pay under the terms of the settlement.
(4) If the employer fails to pay the amount of minimum wages, liquidated damages, or overtime compensation owed within 10 days of the entry of judgment, dismissal or withdrawal of writ, or the execution of a settlement agreement, a portion of the undertaking, described in paragraph (3), equal to the amount owed, or the entire undertaking if the amount owed exceeds the undertaking, shall be forfeited to the employee.
(d) A person to whom a citation has been issued shall, in lieu of contesting a citation pursuant to this section, transmit to the office of the Labor Commissioner designated on the citation the amount specified for the violation within 15 business days after issuance of the citation.
(e) When no petition objecting to a citation or the proposed assessment of a civil penalty, wages, liquidated damages, and any applicable penalties imposed pursuant to Section 203 Sections 203 and 210 is filed, a certified copy of the citation or proposed civil penalty, wages, liquidated damages, and any applicable penalties imposed pursuant to Section 203 Sections 203 and 210 may be filed by the Labor Commissioner in the office of the clerk of the superior court in any county in which the person assessed has or had a place of business. The clerk, immediately upon the filing, shall enter judgment for the state against the person assessed in the amount shown on the citation or proposed assessment of a civil penalty, wages, liquidated damages, and any applicable penalties imposed pursuant to Section 203. Sections 203 and 210.
(f) When findings and the order thereon are made affirming or modifying a citation or proposed assessment of a civil penalty, wages, liquidated damages, and any applicable penalties imposed pursuant to Section 203 Sections 203 and 210 after hearing, a certified copy of these findings and the order entered thereon may be entered by the Labor Commissioner in the office of the clerk of the superior court in any county in which the person assessed has property or in which the person assessed has or had a place of business. The clerk, immediately upon the filing, shall enter judgment for the state against the person assessed in the amount shown on the certified order.
(g) A judgment entered pursuant to this section shall bear the same rate of interest and shall have the same effect as other judgments and be given the same preference allowed by the law on other judgments rendered for claims for taxes. The clerk shall make no charge for the service provided by this section to be performed by him or her.
(h) 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 law, the Labor Commissioner, pursuant to a request from the local entity, may issue a citation against an employer for a violation of any applicable local minimum wage law if the local entity has not cited the employer for the same violation. If the Labor Commissioner issues a citation, the local entity shall not cite the employer for the same violation.
(i) The civil penalties provided for in this section are in addition to any other penalty provided by law.
(j) This section shall not apply to any order of the commission relating to household occupations.
(k) This section does not change the applicability of local minimum wage laws to any entity.
(l) “Wages” as used in this section includes the minimum fixed by an applicable state or local law, or by order of the commission, and regular wages owed to an employee.

SECTION 1.Section 204 of the Labor Code is amended to read:
204.

(a)All wages, other than those mentioned in Section 201, 201.3, 202, 204.1, or 204.2, earned by any person in any employment are due and payable twice during each calendar month, on days designated in advance by the employer as the regular paydays. Labor performed between the 1st and 15th days, inclusive, of any calendar month shall be paid for between the 16th and the 26th day of the month during which the labor was performed, and labor performed between the 16th and the last day, inclusive, of any calendar month, shall be paid for between the 1st and 10th day of the following month. However, salaries of executive, administrative, and professional employees of employers covered by the Fair Labor Standards Act, as set forth pursuant to Section 13(a)(1) of the Fair Labor Standards Act, as amended through March 1, 1969, in Part 541 of Title 29 of the Code of Federal Regulations, as that part now reads or may be amended to read at any time hereafter, may be paid once a month on or before the 26th day of the month during which the labor was performed if the entire month’s salaries, including the unearned portion between the date of payment and the last day of the month, are paid at that time.

(b)(1)Notwithstanding any other provision of this section, all wages earned for labor in excess of the normal work period shall be paid no later than the payday for the next regular payroll period.

(2)An employer is in compliance with the requirements of subdivision (a) of Section 226 relating to total hours worked by the employee, if hours worked in excess of the normal work period during the current pay period are itemized as corrections on the paystub for the next regular pay period. Any corrections set out in a subsequently issued paystub shall state the inclusive dates of the pay period for which the employer is correcting its initial report of hours worked.

(c)However, when employees are covered by a collective bargaining agreement that provides different pay arrangements, those arrangements shall apply to the covered employees.

(d)The requirements of this section shall be deemed satisfied by the payment of wages for weekly, biweekly, or semimonthly payroll if the wages are paid not more than seven calendar days following the close of the payroll period.

(e)(1)In addition to, and entirely independent and apart from, any other penalty provided in this article, every person who fails to pay the wages of any employee as provided in this section shall be subject to a statutory penalty, payable to each affected employee, as follows:

(A)For each affected employee, one hundred dollars ($100) for any initial violation, plus one hundred dollars ($100) for each subsequent calendar day, up to seven days, on which a violation continues.

(B)For each employee affected by a subsequent violation, or any willful or intentional violation, two hundred dollars ($200) for each violation, plus two hundred dollars ($200) for each subsequent calendar day, up to seven days, on which a violation continues.

(2)The penalty described in this subdivision shall be recovered by the Labor Commissioner as part of a hearing held to recover unpaid wages and penalties pursuant to this chapter or by an employee in a civil action for wages.