CA making strides with new wage theft laws – National Consumers League

With the Congress tied up in partisan knots, some states have taken up the responsibility of protecting workers’ rights in the workplace. California recently passed two pieces of legislation that workers’ rights advocates are hoping will serve as a model for other states.

Recently California Governor Jerry Brown signed a pair of workers’ rights bills into law: the Wage Theft Prevention Act (AB 469) and the Employee Classification Act (SB 459). These new laws represent huge steps forward in the fight to protect workers’ rights in an otherwise pro-employer climate.

These new laws strive to prevent wage theft, strengthen existing laws, increase penalties on employers caught cheating their employees, and go after corporations cheating states out of much-needed tax revenue in the form of not paying payroll taxes on misclassified workers.

The Wage Theft Prevention Act (AB 469):

  • Requires employers to provide workers, at the time they’re hired, a written disclosure of the basic terms of employment (the pay rate, the payday, the name and address of the legal employer).
  • Requires employers to notify workers in writing when employment terms change.
  • Requires employers to keep paystub records for three years.
  • Strengthens misdemeanor criminal penalties for employers who willfully fail to pay wages due in 90 days after final judgment.
  • Allows a worker to recover attorney’s fees to enforce a court judgment for unpaid wages.
  • Strengthens existing wage bond requirements that apply to employers convicted of labor law and wage violations.

The Employee Misclassification Act (SB 459):

  • Makes it unlawful for any person or employer to engage in “willful” employee misclassification (classifying an individual as an independent contractor when he or she should really be classified as an “employee.”) This practice not cheats the state out of payroll taxes, and  robs workers of workers compensation benefits, unemployment insurance and  anti-discrimination protections and increases the likelihood that they will suffer minimum wage violations
  • Makes it unlawful to charge any fees or make any deductions in a worker’s paycheck for expenses such as space rental, services, repairs, goods, or materials, where such deductions would have been unlawful had the worker been classified as an employee.
  • Increases penalties that can be assessed against any employer for “willful” employee misclassification. Violation of the statute carries exposure for a “civil penalty” of between $5,000 and $15,000 for each violation; if the employer is found to have engaged “in a pattern or practice of (those) violations,” the civil penalty is increased to $10,000 to $25,000 per violation.
  • Requires public display of employee misclassification violation; employers, who have been found to have engaged in “willful” employee misclassification, must prominently display for one year on their Web site a notice to employees and the general public announcing that the employer “has committed a serious violation of law by engaging in willful misclassification of employees.” Employers that do not have a Web site must have the notice displayed prominently in an area that is “accessible to all employees and the general public at each location where a violation … occurred.”
  • Allows the California Labor and Workforce Development Agency and the California State Labor Commissioner to investigate and impose penalties on employers for employee misclassification violations.

Workers’ rights advocates see these new laws as good, practical examples of what can be done on the state level and would like to see them used as blueprints for other states interested in protecting their workers from the consequences of employee misclassification.