California Strengthens Wage-Theft Laws

Employers could face significant penalties for violations

By Toni Vranjes March 7, 2018

When employers fail to provide full pay to employees for all their hours worked, it's sometimes called wage theft—an issue that has gained visibility in recent years.

Experts say that this type of theft is common, yet it often remains hidden from regulators. And even when workers win judgments against companies, many of them never recover their unpaid wages. They may also face retaliation from their employer for bringing a claim.

To combat the issue, California enacted legislation in January that provides more tools for the labor commissioner to enforce labor laws, and the labor commissioner's office has hired more investigators. At the local level, many cities have created new agencies to enforce local wage laws.

California employers need to ensure they are complying with these laws, or they could face significant penalties. Managers should be trained about the relevant issues that may arise, said John Skousen, an attorney with Fisher Phillips in Irvine.

Scope of the Issue

Wage theft can take many forms, including paying less than minimum wage, failing to provide overtime pay, requiring workers to perform off-the-clock work, and failing to provide meal and rest breaks.

Nearly 34,000 wage-theft claims were made in California in 2017, according to data from the California Department of Industrial Relations. However, the official numbers don't tell the full story, experts say.

"For every wage-theft case that is reported, there are dozens more that don't get reported," said Jora Trang, managing attorney at Worksafe Inc., an employee advocacy group based in Oakland. "That's because of retaliation. If workers know when they report wage theft they're going to get fired, they're less likely to report it."

Undocumented workers often are reluctant to report wage violations because they worry about being deported, said Tia Koonse, legal and policy research manager at the UCLA Labor Center, a university research department focused on labor rights.

Activity in California

In recent years, California has increased the resources available to the labor commissioner for fighting wage theft. For example, S.B. 588—which was signed by Gov. Jerry Brown in 2015—was designed to help workers collect unpaid wages. If an employer fails to pay a judgment for unpaid wages, regulators can impose a lien on the employer's property and levy its bank accounts.

Employers need to pay judgments or appeal decisions that lead to judgments in a timely manner, Skousen said. In order to appeal a labor commissioner  decision in which money was awarded, the employer needs to file, along with the appeal, a bond or cashier's check for the award amount in the designated superior court , he noted. "Doing nothing is bad," he emphasized.

S.B. 306, which took effect on Jan. 1, is another key development, according to Trang. The law enables the labor commissioner to investigate an employer—even without a complaint—when retaliation is suspected during a wage-claim investigation.

Managers should be trained on how to appropriately handle disciplinary matters so they don't retaliate (or appear to be retaliating) against employees who have asserted workplace rights. Skousen noted that "it comes down to issues of timing, proper and adequate record-keeping of legitimate disciplinary action, and understanding what retaliation is."

[SHRM members-only toolkit: Preventing Unlawful Workplace Retaliation in California]

Under S.B. 306, an employer may have to pay the labor commissioner's reasonable attorney fees if violations are found and $100 per day (up to $20,000 total) if it willfully refuses to comply with a court order.

At the local level, wage-theft offices have sprung up to assist workers. Several years ago, Los Angeles created the Office of Wage Standards to enforce its $15 hourly minimum wage. As other cities in California increased their minimum wages, most of them also established wage-theft offices, according to the UCLA Labor Center website.

Notice Requirements

Employers also need to make sure they comply with wage-notice requirements. For example, under the California Wage Theft Protection Act, employers must provide a written notice to new hires that discloses wage information. The notice template provided by the state includes sections on pay rate, overtime compensation and work schedule.

"The purpose of the notice is to inform workers of the wage rates that apply to them," according to the California Department of Industrial Relations.

Toni Vranjes is a freelance business writer in San Pedro, Calif.


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