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.