Wage Law

California Governor Arnold Schwarzenegger has vetoed AB 2187, which would have created a 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, unless exempted, and would impose additional criminal penalties for that conduct.

Existing law makes it a misdemeanor for a person or employer who, having the ability to pay, willfully refuses to pay wages due to a current employee, an employee who has resigned, or an employee who has been discharged. Under existing law, an aggrieved employee has the right to restitution for unpaid wages. Existing law also imposes civil penalties against a person or employer who wrongfully fails to pay wages. AB 2187 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, unless exempted, and would impose additional criminal penalties for that 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 upon conviction.

It would have added a new section 1199.6 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. This section does not apply if
the employee's entitlement to unpaid wages is disputed by the
employer in a civil action or proceeding by the Labor Commissioner
unless a final judgment is entered with respect to that dispute in
favor of the employee.
   (b) An employer or other person guilty of a misdemeanor under
subdivision (a) shall pay, in addition to any criminal fines,
restitution to the aggrieved employee in an amount equal to the total
amount of unpaid wages.
   (c) As used in this section, "willfully" has the same meaning as
provided in Section 7 of the Penal Code.

The Governor's veto message reads:

I am returning Assembly Bill (AB) 2187 without my signature.

AB 2187 would create a new criminal prohibition against a person or an employer who, having the ability to pay, willfully fails to pay all wages to an employee who has been discharged or who has quit within 90 days of the date of the wages becoming due. The bill contains an exemption for instances in which the employee’s entitlement to unpaid wages is disputed by the employer in a civil action or proceeding by the Labor Commissioner unless there is a final judgment in favor of the employee.

Waiting time penalties and defined timeframes for the payment of final wages currently exist in California law, as do mechanisms for enforcement of these obligations. Therefore, this bill is unnecessary.

For this reason, I am returning this bill without my signature

Thus, while employers who don't exploit their employees are unaffected by the bill or the veot, the worst of California's worst employers can sleep a little easier at night, not that it matters that much. Nobody prosecutes these cases in the first place.

California Governor Arnold Schwarzenegger has vetoed AB 2773, which would have provided for prevailing plaintiffs to recover attorney's fees and costs even if they recovered less than the jurisdiction limit of the court in which their case was filed.

Existing law provides that a prevailing party is entitled as a matter of right to recover costs in any action or proceeding, and specifies those items allowable as costs. It also provides that costs, or any portion of claimed costs, shall be as determined by the court, in its discretion, in a case other than a limited civil case, if the prevailing party recovers a judgment that could have been rendered in a limited civil case. In other words, if the award does not exceed $25,000. AB 2773 would exempt this limitation for plaintiffs prevailing in actions brought under a specified provision of the Fair Employment and Housing Act alleging an unlawful practice.

The Governor's veto message reads:

To the Members of the California State Assembly:

I am returning Assembly Bill 2773 without my signature.

This measure would require an award of attorney’s fees in all fair employment and housing cases even when nominal damages are awarded and even if the case was improperly filed in a court of unlimited jurisdiction. While there may be instances when an award of attorneys fees may be proper, this measure removes all discretion from a judge and encourages frivolous lawsuits.

For this reason, I am unable to sign this bill..

These vetoes offer some insight as to why employment attorneys are not embracing Meg Whitman's candidacy.

California Governor Arnold Schwarzenegger has vetoed AB 2770, which would have created a pilot program to investigate employment and payment practices within the swimming pool and spa construction industry and develop and implement a set of criteria that, if met by an employer, would trigger a recommendation for an audit or investigation by the appropriate state tax authorities.

AB 2770 would, until January 1, 2017, establish a pilot program to investigate employment and payment practices within the swimming pool and spa construction industry. The bill would require the Employment Development Department, in consultation with the Franchise Tax Board, the Department of Justice, the Department of Insurance, the Labor and Workforce Development Agency, and industry representatives, to develop and implement a set of criteria that, if met by an employer, would trigger a recommendation for an audit or investigation by appropriate state tax authorities to determine if the employer is in violation of statutes relating to employee wages, hours, and working conditions. After July 1, 2011, it would require the Employment Development Department to take specified actions with respect to an employer when application of the set of criteria indicates that a violation of the statutes described above may have occurred. This bill also would state findings and declarations relating to the underground economy and the swimming pool and spa construction industry.

From our own experience, we can state with a high degree of confidence that contractors in the pool and spa industry are among the dirtiest of all businesses in the state. So dirty, in fact, that the legislature imposes stricter requirements upon them for their consumer contracts than any other class of contractor must meet, and the CSLB requires them to post larger license bonds that other classes of contractors. Nonetheless, the Governor didn't like the bill.

The Governor's veto message reads:

To the Members of the California State Assembly:

I am returning Assembly Bill 2770 without my signature.

This bill would 1) create a pilot program to investigate employment and payment practices within the swimming pool and spa construction industry; and, 2) require the Employment Development Department, in consultation with the Franchise Tax Board, the Department of Justice, the Department of Insurance, the Labor and Workforce Development Agency, and industry representatives, to develop and implement a set of criteria that, if met by an employer, would trigger a recommendation for an audit or investigation by the appropriate state tax authorities.

My Administration has been committed to vigorously enforcing the laws of this state and maximizing resources to combat the underground economy. As shown in creation of the Economic and Employment Enforcement Coalition, I support implementing targeted systems of coordination. However, as I have repeatedly indicated, legislating that coordination and the adoption of protocols or standards for that is unnecessary. If existing laws impeded this coordination, it would be appropriate to alter those. However, simply statutorily instructing the respective enforcement agencies to in essence work together does not assist them in a substantive and practical way. Moreover, I also note that this bill fails to prescribe what it is intended to achieve. Rather than creating a trigger for a tax audit when labor laws are found to have been violated as the bill intends, this bill instructs tax authorities to recommend and conduct audits or investigations to determine specifically whether labor laws, rather than tax laws, have been violated. Having tax authorities audit and investigate for potential labor law violations is inconsistent with their expertise, and instead is a function of the Division of Labor Standards Enforcement.

For these reasons, I am returning this bill without my signature.

This was one of the longest veto messages of the session.

California Governor Arnold Schwarzenegger has vetoed SB 903. Existing law provides that an action by the Division of Labor Standards Enforcement for collection of a statutory penalty or fee must be commenced within one year after the penalty or fee becomes final. SB 903 would have extended the period within which the division may commence a collection action, as defined, from one year to 3 years.

The Governor's veto message reads:

To the Members of the California State Senate:

I am returning Senate Bill 903 without my signature. This bill would extend the period of time within which the Division of Labor Standards Enforcement (DLSE) may commence a collection action for recovery of civil penalties from one year to three years from the date the penalty or fee became final.

While I appreciate the author’s attempts to ensure that DLSE is afforded enough time to initiate legal proceedings to collect penalties, there has been no clear demonstration that existing law presents any significant difficulty for the division.

Since an extension of the statute of limitations is unnecessary, I am returning this bill without my signature.

The bill would not have affected limitations periods for private actions to collect penalties.

California Governor Arnold Schwarzenegger has signed AB 569, a bill to amend Labor Code § 512, to exempt certain union employees from existing meal peroid requirements if they are covered by a collective bargaining agreement that contains meal period provisions.

Existing law prohibits, subject to certain exceptions, an employer from requiring an employee to work more than 5 hours per day without providing a meal period and, notwithstanding that provision, authorizes the Industrial Welfare Commission to adopt a working condition order permitting a meal period to commence after 6 hours of work if the order is consistent with the health and welfare of affected employees. This bill would exempt from these provisions employees in a construction occupation, commercial drivers, employees in the security services industry employed as security officers, and employees of electrical and gas corporations or local publicly owned electric utilities, as defined, if those employees are covered by a valid collective bargaining agreement containing specified terms, including meal period provisions. It would specify that its provisions do not affect the requirements for meal periods for certain other employees or employers.

Section 512 of the Labor Code is amended to read:

512.  (a) An employer may not employ an employee for a work period
of more than five hours per day without providing the employee with
a meal period of not less than 30 minutes, except that if the total
work period per day of the employee is no more than six hours, the
meal period may be waived by mutual consent of both the employer and
employee. An employer may not employ an employee for a work period of
more than 10 hours per day without providing the employee with a
second meal period of not less than 30 minutes, except that if the
total hours worked is no more than 12 hours, the second meal period
may be waived by mutual consent of the employer and the employee only
if the first meal period was not waived.

   (b) Notwithstanding subdivision (a), the Industrial Welfare
Commission may adopt a working condition order permitting a meal
period to commence after six hours of work if the commission
determines that the order is consistent with the health and welfare
of the affected employees.

   (c) Subdivision (a) does not apply to an employee in the wholesale
baking industry who is subject to an Industrial Welfare Commission
wage order and who is covered by a valid collective bargaining
agreement that provides for a 35-hour workweek consisting of five
7-hour days, payment of one and one-half times the regular rate of
pay for time worked in excess of seven hours per day, and a rest
period of not less than 10 minutes every two hours.

   (d) If an employee in the motion picture industry or the
broadcasting industry, as those industries are defined in Industrial
Welfare Commission Wage Order Numbers 11 and 12, is covered by a
valid collective bargaining agreement that provides for meal periods
and includes a monetary remedy if the employee does not receive a
meal period required by the agreement, then the terms, conditions,
and remedies of the agreement pertaining to meal periods apply in
lieu of the applicable provisions pertaining to meal periods of
subdivision (a) of this section, Section 226.7, and Industrial
Welfare Commission Wage Order Numbers 11 and 12.

   (e) Subdivisions (a) and (b) do not apply to an employee specified
in subdivision (f) if both of the following conditions are
satisfied:

   (1) The employee is covered by a valid collective bargaining
agreement.
   (2) The valid collective bargaining agreement expressly provides
for the wages, hours of work, and working conditions of employees,
and expressly provides for meal periods for those employees, final
and binding arbitration of disputes concerning application of its
meal period provisions, premium wage rates for all overtime hours
worked, and a regular hourly rate of pay of not less than 30 percent
more than the state minimum wage rate.

   (f) Subdivision (e) applies to each of the following employees:

   (1) An employee employed in a construction occupation.
   (2) An employee employed as a commercial driver.
   (3) An employee employed in the security services industry as a
security officer who is registered pursuant to Chapter 11.5
(commencing with Section 7580) of Division 3 of the Business and
Professions Code, and who is employed by a private patrol operator
registered pursuant to that chapter.
   (4) An employee employed by an electrical corporation, a gas
corporation, or a local publicly owned electric utility.

   (g) The following definitions apply for the purposes of this
section:

   (1) "Commercial driver" means an employee who operates a vehicle
described in Section 260 or 462 of, or subdivision (b) of Section
15210 of, the Vehicle Code.
   (2) "Construction occupation" means all job classifications
associated with construction by Article 2 (commencing with Section
7025) of Chapter 9 of Division 3 of the Business and Professions
Code, including work involving alteration, demolition, building,
excavation, renovation, remodeling, maintenance, improvement, and
repair, and any other similar or related occupation or trade.
   (3) "Electrical corporation" has the same meaning as provided in
Section 218 of the Public Utilities Code.
   (4) "Gas corporation" has the same meaning as provided in Section
222 of the Public Utilities Code.
   (5) "Local publicly owned electric utility" has the same meaning
as provided in Section 224.3 of the Public Utilities Code.

  SEC. 2.  Notwithstanding any other provision of law, paragraphs (1)
and (2) of subdivision (e) of Section 512 of the Labor Code do not
affect the nature or scope of the law related to meal periods,
including the timing of commencement of a meal period, for employees
or employers not specifically covered by paragraphs (1) and (2) of
subdivision (e) of Section 512 of the Labor Code.

  SEC. 3.  Notwithstanding any other provision of law, including
applicable Industrial Welfare Commission orders, the addition of
paragraph (3) of subdivision (f) to Section 512 of the Labor Code
made by this act does not affect the nature or scope of the law
relating to meal periods for security officers who are not covered by
a valid collective bargaining agreement.

This is the only wage and hour bill we've seen come back with a signature. If we missed any, let us know.

California Governor Arnold Schwarzenegger has vetoed SB 1370, which was enacted in response to a 1999 federal court ruling (Lett v. Paymentech, Inc. (ND Cal 1999) 81 F.Supp.2d 992) that invalidated Labor Code § 2751. Section 2751 required employers with no permanent and fixed place of business in California, who entered into a contract of employment involving commissions as a method of payment for services rendered within California, to put the contract in writing and to set forth the method by which the commissions are required to be computed and paid. An out-of-state employer who did not comply with those requirements was liable to the employee in a civil action for triple damages. Employers with a permanent presence in California had no similar requirement.

To resolve the constitutionality problems as decided in Lett v. Paymentech, Inc., SB 1370 would have applied this requirement to all employers entering into a contract of employment involving commissions as a method of payment with an employee for labor performed in California, whether or not they maintained a place of business within the state.

The Governor's veto message reads:

To the Members of the California State Senate:

I am returning Senate Bill 1370 without my signature.

This bill would require that beginning in 2012, all employment contracts for services
rendered within California in which the method of payment involves commissions, be in
writing, and set forth the method by which the commissions shall be computed and paid.

This bill addresses a federal district court decision which held Labor Code section 2751
to be unconstitutional. However, there is no indication that there is a widespread problem
of wage disputes resulting from the lack of written commission-based employment
contracts in California. Therefore, the manner in which this bill remedies the existing
law’s constitutional infirmity creates potentially unnecessary new burdens on all
businesses employing persons in California. If it becomes apparent that there is an actual
problem arising from a lack of written commissioned-based contracts in California, then
it would be appropriate to revisit this issue. At this time, however, there is no clear need
for this bill.

For this reason, I am returning this bill without my signature.

We've had quite a few cases involving disputes over how commissions should be calculated. We expect that will continue.

California Governor Arnold Schwarzenegger has vetoed AB 677, which would have provided that renewable energy projects serving school and college district be classified as public works projects.

Existing law defines "public works," for purposes of regulating public works contracts, as, among other things, construction, alteration, demolition, installation, or repair work done under contract and paid for, in whole or in part, out of public funds. Existing law further requires that, except as specified, not less than the general prevailing rate of per diem wages be paid to workers employed on public works and imposes misdemeanor penalties for a violation of this requirement. Existing law provides that for the purposes of provisions of law relating to the payment of prevailing wages, "public works" includes specified types of construction, alteration, demolition, installation, and repair work.

AB 677 would have revised the definition of "public works" for these purposes to include the construction, alteration, demolition, installation, and repair work done under private contract when specified conditions are met, including the requirement that the work is performed in connection with the construction or maintenance of renewable energy generation capacity, located on property wholly or partially owned by a school district or community college district, or on public property, specifically to serve a school district or community college district.

The Governor's veto message reads:

To the Members of the California State Assembly:

I am returning Assembly Bill 677 without my signature.

Defining projects for renewable energy generating facilities serving school and community college districts as public works when the only public funds are those spent to purchase power produced is an unwarranted expansion of prevailing wage requirements into private works of improvement. Because the payment of prevailing wages results in higher costs, the bill may potentially reduce the number of renewable energy projects undertaken.

For these reasons, I am returning this bill without my signature.

The governor's pattern is quite clear: in matters involving wages, any bill which favors business over employees is getting signed; any which favors employees over business is getting the veto.

Governor Arnold Schwarzenegger has appointed of Angela Bradstreet to a judgeship in the San Francisco County Superior Court. Bradstreet has served as state labor commissioner since 2007. She fills the vacancy created by the retirement of Judge David Ballati. Bradstreet is a Democrat. Source.

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.

It apparently hasn't been filed yet, but the former housekeeper of Republican gubernatorial nominee Meg Whitman plans to file a civil action for unpaid wages and mileage reimbursement against Whitman. The housekeeper, Nicandra "Nicky" Diaz Santillan, has come forward and admitted that she is an illegal immigrant who deceived Whitman and the agency that placed her by using a fake social security card and a driver's license to prove her immigration status. Whitman fired her last year. Santillan says it was because Whitman planned to run for governor and didn't want the attention that comes from employing an illegal alien. Whitman says it's because Santillan came to her and asked for help obtaining legal status, at which point Whitman realized that she could no longer employ Santillan.

Santillan is represented by Gloria Allred, who issued a press release earlier this week that described Whitman's employment practices as "don't ask, don't tell" and said that "Don't ask don't tell may have become OMG, she will tell if I continue to employ her." That seems a bit counterintuitive to us. Ordinarily, we've found that employers are more like to worry about what people will tell if you fire them, not what they'll tell if you let them keep a job, especially when you are paying $23 an hour for a housekeeper.

Allred said Whitman caused the worker to "feel exploited, disrespected, humiliated, and emotionally and financially abused." As a result, she'll be suing for back wages for off-the-clock work, and unpaid mileage incurred while running errands. It wouldn't surprise us to learn that a wealthy executive had a personal assistant working off the clock and running errands without getting mileage, but that part of the case isn't getting much attention. All anyone cares about is that this woman wasn't in the U.S. legally. The hot topic is not whether Whitman cheated her employee out of wages or expense reimbursements. It's whether Whitman should have known Santillan was illegal after receiving a letter from the  U.S. Social Security Administration office, which advised Whitman that Santillan’s name did not match her Social Security number. Allred has already shared a blowup of the letter with the media. There are two versions of how the housekeeper got the letter. One version is that she pulled it from the trash and saved it for seven years. The other version is that Whitman's husband asked her to look into the problem. Curiously, the source for both versions is the housekeeper.

Perhaps it's because we don't love media attention as much as we love getting money for our exploited clients, but we can't help but think that this media circus benefits the lawyers and the Brown campaign more than it benefits the plaintiff. This is probably a case that could have been settled for a pretty big chunk of change, quietly and quickly, without exposing the plaintiff as a person who broke the law by falsifying documents and who is eligible for deportation. When we represented undocumented workers in wage claims, we make it a point to keep their immigration status as unknown as possible.

Bridgeport Education's 2010 Wage & Hour Conference is set for October 7 and 8, 2010, in San Francisco at the Hyatt Regency, located at 5 Embarcadero. Topics will include recent developments, hybrid FLSA - state law collective and class actionsm, class certification, Brinker, discovery, independent contractor classification, arbitration, mediation and settlement of individual and classwide wage and hour claims.The programs are usually pretty good. For further information, or to register, clink on this link or call (818) 783-7156.