A new California law aims to reduce wage violations by setting monetary penalties for employers and gives prosecutors the authority to charge the employer with a misdemeanor or felony. This article will discuss what employers may face for violations of the new law. In addition, we summarize a pending New York wage theft bill that may become law.
Specifics of AB 1003
Under AB 1003, the intentional theft of an employee’s wages, tips, or benefits of one employee will result in a fine of at least $950, while intentional theft from two or more employees (in any 12-month period), will result in a fine at a minimum of $2,350. This intentional theft is punishable under the law as grand theft. Currently, grand theft as a misdemeanor is punishable by imprisonment in a county jail for up to 1 year. As a felony, grand theft can be punishable by imprisonment for 16 months to 3 years, by a fine, or a combination of a fine and imprisonment.
This applies to employers of all sizes, even individual owners. Under the California Labor Commissioner’s Office, wage theft occurs anytime employees are not paid what they are owed by law. Wage and hour errors should be corrected immediately to avoid liability.
Some examples of wage theft include:
- paying employees less than minimum wage;
- preventing employees from taking meal or rest periods;
- paying an employee a different and lower amount than what was previously agreed on;
- management taking tips from employees;
- preventing use of paid days off to which the employee is entitled;
- failing to reimburse an employee for expenses;
- claiming unauthorized deductions from an employee’s paycheck;
- bouncing paychecks;
- not paying final wages in a reasonable time.
Similar to other recent employment protections, this law expands protections to independent contractors and classifies them within the meaning of an employee. Employers that engage in wage theft from independent contractors are subject to the same penalties or criminal charges. All employers with independent contractors should make sure their contractors are being paid in compliance with the law.
SWEAT Bill Pending in New York
The Securing Wages Earned Against Theft (“SWEAT”) bill was originally introduced to the New York legislature back in June of 2013. The bill was passed in the legislature in 2019 but was ultimately vetoed by Governor Cuomo in early 2020. The SWEAT bill is now back on the docket this legislative session.
Passage of the SWEAT bill would strengthen the labor laws and make it more difficult for employers to sell or transfer their property or assets during pending wage theft accusations to avoid paying judgments. Currently, employers are able to declare bankruptcy and simply start a new business to avoid paying judgment in wage theft claims.
The bill consists of three parts:
- Establishes a “wage lien” that allows workers to put a hold on their employers’ property until they receive wages that they are owed. The Department of Labor and New York State Attorney General are also able to file a wage lien on behalf of employees that are owed wages.
- Allows employees to hold an employer’s property until the claim of unpaid wages is resolved.
- Allows employees of non-publicly traded companies to hold the individuals with the largest share of company ownership personally liable for wage theft.
California’s passage of AB 1003 sets the stage for other states to also push for legislation that expands wage theft protections. Previously passed in 2019, New York’s SWEAT bill is currently pending in the assembly and if passed again, will tighten the ability to obtain wage theft judgments.