Bill targets wage theft
State measure would require firms to post a $150,000 bond toward employees’ back pay.
A state measure would require firms to post a $150,000 bond toward employees’ back wages if the firms fail to pay what the state orders.
Workers in California are paid less than the legal minimum wage about 372,000 times every week, according to the U.S. Department of Labor.
Their employers are seldom called to account. Even when employers are ordered to pay back wages by the state, only a fraction of the employees ever collect what they are owed.
New state Senate legislation introduced Tuesday aims to give state authorities more power to collect back wages from violators.
The bill, from Senate leader Kevin de Leon (DLos Angeles), would require companies to post a $150,000 bond toward employees’ back wages if the firms fail to pay what the state orders.
Companies that don’t post the bond could face a stop-work order or a lien from the Labor Commissioner’s office that would attach to property owned by the employer.
Labor Commissioner Julie Su has improved wage collection, De Leon said, but the measure would broaden the state’s powers to pursue scofflaws.
“She needs the tip of the spear to be sharper,” De Leon said.
The legislation would also allow the state to issue citations directly to business owners, a move intended to prevent violators from forming shell companies to avoid legal judgments.
As many as 60% of wage judgments issued by the state involved instances in which a company had changed names or dissolved, according to a 2013 report by the UCLA Labor Center.
The goal of the legislation is to “pierce the corporate veil,” said Tia Koonse, legal and policy research manager at the UCLA Labor Center.
“Those bad actors that have outstanding judgments can’t hide anymore,” she said.
A similar bill to address the problem of “wage theft” died in the Legislature last year.
That legislation, sponsored by Assemblyman Mark Stone (D-Scotts Valley), would have given employees greater power to file liens against their employers for back pay.
De Leon said there were “deep reservations” from both parties about giving employees the right to file wage liens directly.
He said his legislation strikes a balance by giving discretion to the Labor Commissioner’s office.
“We take a much more targeted approach, by zeroing in on the bad actors,” he said.
A spokeswoman for Su said the agency does not comment on pending legislation.
The 2013 UCLA Labor Center study found that between 2008 and 2011 only 17% of workers who obtained a judgment against their employer ever collected any of the money.
Another Labor Center survey of low-wage workers in Los Angeles County found that nearly 30% reported being paid below the minimum wage in the previous week.
Minimum-wage violations in California drove as many as 41,000 families below the poverty line, according to a December study by the U.S. Department of Labor.
De Leon’s bill will be up for consideration in two Senate committees next week.