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Unpaid Wages / December 5, 2015

New CA Law Targets Supervisors And Employer Property To Prosecute Wage Theft

What Is Wage Theft?

Wage theft is the illegal practice of not paying workers for all of their work.  This includes violating minimum wage laws, not paying overtime, forcing workers to work off the clock, denying meal and rest breaks, illegal deductions, and more.

How Widespread Is Wage Theft?

December 2014 study by the United States Department of Labor found that more than 300,000 minimum wage violations occur in California each week.  The study reported that the cost of wage theft violations in California to be between $22.5 and $28.7 million per week.  This constitutes between $1.2 and $1.5 billion in minimum wage violations in California annually. 

According to a report by the Institute for Research on Labor and Employment at the University of California, Los Angeles, wage theft in Los Angeles County alone costs low-wage workers $26.2 million per week.  The report also indicated that there were over 650,000 violations per week in just Los Angeles County.

Difficulty Collecting Stolen Wages

According to a 2013 report from the UCLA Labor Center's National Employment Law Project, only 17 percent of workers who win a final judgment for unpaid wages with the California Division of Labor Standards Enforcement (DLSE) ever collect a payment.  

This is because many of the businesses that are the worst violators of California's wage laws simply close up their businesses when workers try to hold them accountable for wage theft.  In fact, in over 60% of the cases where the DLSE found an employer owed wages, the employer was listed as "non-active," i.e., defunct. 

SB 588 Provides New Authority To Collect Stolen Wages

California Senate Bill 588 ("SB 588") was signed into law by Governor Brown on October 11, 2015 and becomes effective January 1, 2016. 

SB 588 gives the California Labor Commissioner the right to use any of the existing remedies available to a judgment creditor and to act as a levying officer when enforcing a judgment.  In other words, if an employee brings a successful wage claim against an employer, the Labor Commissioner can place a lien on the employer's property or levy on the business bank accounts and/or accounts receivable.

Even more, under SB 588, an employee can bring a wage theft claim against the owners of the employing company as well as anyone else who acts "on behalf of" the employer.  This essentially creates individual liability in California for wage and hour violations because the Labor Commissioner can now seize the personal property and bank accounts of individual owners and others who violate California wage and hour laws.   

SB 588 also prevents an employer from closing down its business and re-opening under a new name in order to avoid its debts to workers.  Under SB 588, any new business that is "similar in operation and ownership" to the guilty employer is also liable for the wages owed.

SB 588 also authorizes the Labor Commissioner to require employers found guilty of wage theft to post a bond ranging from $50,000 to $150,000 in order to continue to do business in the state.  Employers who fail to post the required bond can have their business license revoked by the Labor Commissioner. 

Finally, SB 588 authorizes the Labor Commissioner to impose civil penalties for wage theft in the amount of $2,500 for the first offense and $100 for each calendar day the employer continues in violation of the law (up to $100,000). 

Have You Been A Victim Of Wage Theft?

If your employer has failed to pay you all of your wages, including you regular and overtime wages, and provide you legally compliant meal breaks and rest breaks, Contact Sani Law today to schedule a free consultation.  We will aggressively pursue compensation from employers that fail to follow the law.

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