Wage Law

California Governor Arnold Schwarzenegger has vetoed AB 1881, which would have provided for double liquidated damages in civil actions on minimum wage violations

Under existing law, in a court action to recover wages unpaid in violation of the minimum wage, the court may award liquidated damages to an employee equal to the amount of wages unlawfully unpaid, plus interest. Essentially, the employer is liable merely for the wages it should have paid in the first place. AB 1881 would have increased the amount of liquidated damages that may be awarded to an employee to twice the amount of the wages unlawfully unpaid, plus interest.

The Governor's veto message reads:

To the Members of the California State Assembly:

I am returning Assembly Bill 1881 without my signature.

This bill would increase liquidated damages in civil actions for minimum wage violations to twice the wages unlawfully unpaid and interest thereon.

Existing law allows for liquidated damages equal to wages owed, in addition to interest, other penalties, and attorneys’ fees. There is no information to show that the existing enforcement and protections of California’s minimum wage laws are insufficient.

Consequently, I am returning this bill without my signature.

Mark Schacht, deputy director of the California Rural Legal Assistance Foundation, put it this way: "This Republican governor, like all recent Republican governors, has been content to leave state labor agencies underfunded and to aggressively restrict expansion of private remedies for enforcement." The vetoes essentially defend "the worst actors in the underground economy, and the governor and his allies at the Chamber of Commerce know it."

This veto is one of the last in a six year battle between Schwarzenegger and the legislature over minimum wage issues. The November election should have a significant effect upon the future of California's wage and hour laws. If we had to guess, we'd guess that Meg Whitman would have given this a veto, too, but that Jerry Brown would have signed it.