Underpaying workers could lead to jail time for California employers under proposed law
Employers who fail to pay their workers properly could face up to three years in jail under a new bill proposed by a California Democrat that would classify the offense as grand theft.
The bill would give California regulators an additional tool to enforce the state’s minimum wage and other pay laws, said Assemblywoman Lorena Gonzalez, D-San Diego, who introduced the proposal. Various studies have shown that California workers lose $1 billion to $2 billion every year to wage theft.
“We want people to be deterred,” Gonzalez said. “We need to look at wage theft like other crimes.”
Wage theft can take many forms, from not paying workers minimum wage or overtime to violating the state’s meal and rest break requirements.
In 2015, former Gov. Jerry Brown signed a bill to crack down on wage theft, such as allowing regulators to impose a lien on the property of employers who fail to pay.
Recovering unpaid wages remains difficult. About 30,000 workers who filed claims in 2017 were able to collect less than 20% of wages owed to them, according to a 2020 report from the Legislative Analyst’s Office.
The state’s labor commissioner hired 32 employees in 2020 to address wage theft claims, said Paola Laverde, a spokeswoman for the office. The office has created a process to accept claims and process them remotely. It is also building expertise among its staff by assigning them cases in specific low-wage industries, she said.
Still, it takes 380 days on average for a claim to be heard, she said, although she noted not all cases go to hearing and some are resolved through settlement or voluntary payment by the employer.
Some businesses contest citations for years, according to a 2013 report from the UCLA Labor Center. Those who lose their cases sometimes had closed their businesses and reopened under a new name, a loophole that a state law closed last year.
By making wage theft of $950 or greater punishable as grand theft, employers will have to think twice before they intentionally decide not to pay what workers are owed, Gonzalez said.
John Kabateck, California director for the National Federation of Independent Business representing 15,000 small businesses in the state, said the organization doesn’t condone intentional wage thefts. He still called the bill unnecessary and burdensome, noting the state’s existing regulations. Theoretically, the bill could punish employers for making “honest mistakes,” he said.
“At face value, it appears to be a legislation that will do nothing more than create unnecessary fear and uncertainty in small business owners,” he said. “California’s small business owners, especially during the pandemic, have faced a tsunami of onerous and complex labor laws, rules and requirements that they are trying to make sense of.”
The California Policy Center, a libertarian think tank, also criticized the bill in the organization’s newsletter, saying employers could be punished for mistakes such as failing to account for a Christmas bonus in their overtime calculation.
But Gonzalez said she doesn’t expect prosecutors to go after businesses who make a one-time mistake. The bill would apply in “truly egregious cases” where someone clearly intends to steal workers’ wages, she said. She also noted employers can correct any genuine mistakes before they are sent to court for their workers’ claim.
This story was originally published March 5, 2021 at 5:25 AM.
