SHRM Opposes California Bill with Blanket Employer Wage Penalty

SHRM has expressed its opposition to California Assembly Bill 1234, introduced by Assemblymember Liz Ortega. The bill proposes a major overhaul of the labor commissioner’s wage claim process, introducing new financial penalties for employers, regardless of fault or intent. While SHRM advocates for the strong enforcement of wage and labor laws, it believes this bill’s disproportionate penalties could hurt employers operating in good faith.  

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Under AB 1234, a mandatory 30% administrative penalty would automatically apply to every order, decision, or award the labor commissioner issues — even before any appeal or judicial review can take place. According to SHRM, this blanket penalty would impose a significant financial burden on employers who may simply be exercising their right to due process, particularly in cases where the facts are uncertain or liability is ambiguous. Such a framework discourages legitimate defenses and could dissuade employers from seeking clarity or fairness in disputed claims.

The bill also introduces significant changes to the current wage mediation process. This would drive up compliance costs, increase legal risks, and create greater uncertainty, according to SHRM. For employers, particularly small and midsize businesses, these changes would add new administrative burdens and requirements without delivering meaningful improvements in efficiency or fairness. SHRM said these adjustments could lead to delays and confusion, ultimately impacting all involved parties, including employees seeking a prompt resolution of valid claims.

Furthermore, AB 1234 enforces strict procedural obstacles and automatic financial penalties, compounding the difficulties already facing California businesses. Employers would be required to pay an administrative fee upfront before having any chance for judicial review, effectively penalizing them regardless of fault or intent. The bill also shortens response times, investigation periods, and appeal deadlines, leaving employers with minimal flexibility to build valid defenses, collect essential documentation, or resolve disputes reasonably.

These structural changes would raise compliance costs and legal risks, SHRM said, placing a disproportionate burden on small and mid-sized businesses that may struggle to meet the heightened demands. Inevitably, these increased costs would ripple through the economy, leading to higher prices for goods and services, reducing affordability for California’s working families, and stifling job creation, wage growth, and long-term business stability. AB 1234, in SHRM’s view, fails to strike an essential balance between accountability and fairness. Rather, it introduces burdens that could undermine due process rather than strengthen it.