AB 1234: Employment: nonpayment of wages: complaints.
- Session Year: 2025-2026
- House: Assembly
- Latest Version Date: 2025-07-17
Current Status:
In Progress
(2025-09-03: Ordered to inactive file at the request of Senator Smallwood-Cuevas.)
Introduced
In Committee
Awaiting First Chamber Vote
Passed First Chamber
In Committee
Awaiting Second Chamber Vote
Passed Second Chamber
Enacted
Existing law authorizes the Labor Commissioner to investigate employee complaints and to provide for a hearing in any action to recover wages, penalties, and other demands for compensation. Existing law requires the Labor Commissioner to determine all matters arising under the commissioners jurisdiction. Existing law makes any employer or other person acting on behalf of an employer who violates or causes to be violated specified provisions regulating hours and days of work in any order of the Industrial Welfare Commission to be subject to a civil penalty, as specified.
This bill would revise and recast the provisions relating to the process for the Labor Commissioner to investigate, hold a hearing, and make determinations relating to an employees complaint. The bill would set forth timelines for the Labor Commissioner to notify parties of an employee complaint, as provided, and for the defendant to respond, as provided. The bill would require the Labor Commissioner, if the Labor Commissioner determines to prosecute the action or that no action will be taken, to notify the parties within 30 days of receipt of the defendants answer. If the Labor Commissioner does not make either of those determinations, the bill would require the Labor Commissioner, within 90 days of receipt of the defendants answer, to conduct an investigation of the employee complaint, make an estimated appraisal of the amount of wages, damages, penalties, expenses, and other compensation owed, and to determine all the parties liable for the assessment. The bill would set forth a process for the Labor Commissioners investigation, assessment, and determination, including authorizing the Labor Commissioner to issue a subpoena for records and requiring the Labor Commissioner to issue a formal complaint.
This bill would require the Labor Commissioner, within 90 days of the issuance of the formal complaint, to set a hearing date and would set forth procedures for the hearing. The bill would require the Labor Commissioner, within 15 days of the hearing, or upon a failure of the defendant to answer or appear, to file in the office of the Division of Labor Standards Enforcement a copy of the order, decision, or award.
This bill would require authorize the Labor Commissioner, in an order, decision, or award granted by the Labor Commissioner pursuant to specified provisions to impose an administrative fee payable in the amount of up to 30% of the order, decision, or award. award, as provided. The bill would require the administrative fee to be deposited into the Wage Recovery Fund, which would be created by the bill. The bill would require the money in the fund, upon appropriation, to be disbursed by the Labor Commissioner only to persons determined by the Labor Commissioner to have been damaged by the failure to pay wages and penalties and for other damages by an employer. The bill would require a disbursement to be made pursuant to a claim for recovery from the fund in accordance with procedures prescribed by the Labor Commissioner and would require any disbursed funds subsequently recovered by the Labor Commissioner from a liable party, as provided, to be returned to the fund. The bill would require the Labor Commissioner to waive any or all of the administrative fee upon request by a defendant, if specified conditions are met.
This bill would classify an appeal filed in a superior court relating to the Labor Commissioners order, decision, or award as an unlimited civil case. The bill would grant a court hearing the action jurisdiction over the entire wage dispute, including related wage claims not raised in front of the Labor Commissioner, but would prohibit the court from consolidating the action with any other actions not arising out of, or related to, the underlying order, decision, or award, absent an executed agreement in writing by all parties.
Existing law authorizes the Labor Commissioner to investigate employee complaints and to provide for a hearing in any action to recover wages, penalties, and other demands for compensation. Existing law requires the Labor Commissioner to determine all matters arising under the commissioners jurisdiction. Existing law makes any employer or other person acting on behalf of an employer who violates or causes to be violated specified provisions regulating hours and days of work in any order of the Industrial Welfare Commission to be subject to a civil penalty, as specified.
This bill would revise and recast the provisions relating to the process for the Labor Commissioner to investigate, hold a hearing, and make determinations relating to an employees complaint. The bill would set forth timelines for the Labor Commissioner to notify parties of an employee complaint, as provided, and for the defendant to respond, as provided. The bill would require the Labor Commissioner, if the Labor Commissioner determines to prosecute the action or that no action will be taken, to notify the parties within 30 days of receipt of the defendants answer. If the Labor Commissioner does not make either of those determinations, the bill would require the Labor Commissioner, within 90 days of receipt of the defendants answer, to conduct an investigation of the employee complaint, make an estimated appraisal of the amount of wages, damages, penalties, expenses, and other compensation owed, and to determine all the parties liable for the assessment. The bill would set forth a process for the Labor Commissioners investigation, assessment, and determination, including authorizing the Labor Commissioner to issue a subpoena for records and requiring the Labor Commissioner to issue a formal complaint.
This bill would require the Labor Commissioner, within 90 days of the issuance of the formal complaint, to set a hearing date and would set forth procedures for the hearing. The bill would require the Labor Commissioner, within 15 days of the hearing, or upon a failure of the defendant to answer or appear, to file in the office of the Division of Labor Standards Enforcement a copy of the order, decision, or award.
This bill would require an order, decision, or award granted by the Labor Commissioner pursuant to specified provisions to impose an administrative fee payable in the amount of 30% of the order, decision, or award. The bill would require the administrative fee to be deposited into the Wage Recovery Fund, which would be created by the bill. The bill would require the money in the fund, upon appropriation, to be disbursed by the Labor Commissioner only to persons determined by the Labor Commissioner to have been damaged by the failure to pay wages and penalties and for other damages by an employer. The bill would require a disbursement to be made pursuant to a claim for recovery from the fund in accordance with procedures prescribed by the Labor Commissioner and would require any disbursed funds subsequently recovered by the Labor Commissioner from a liable party, as provided, to be returned to the fund. The bill would authorize require the Labor Commissioner to waive any or all of the administrative fee upon request by a defendant, if specified conditions are met.
This bill would classify an appeal filed in a superior court relating to the Labor Commissioners order, decision, or award as an unlimited civil case. The bill would grant a court hearing the action jurisdiction over the entire wage dispute, including related wage claims not raised in front of the Labor Commissioner, but would prohibit the court from consolidating the action with any other actions not arising out of, or related to, the underlying order, decision, or award, absent an executed agreement in writing by all parties.
Existing law authorizes the Labor Commissioner to investigate employee complaints and to provide for a hearing in any action to recover wages, penalties, and other demands for compensation. Existing law requires the Labor Commissioner to determine all matters arising under the commissioners jurisdiction. Existing law makes any employer or other person acting on behalf of an employer who violates or causes to be violated specified provisions regulating hours and days of work in any order of the Industrial Welfare Commission to be subject to a civil penalty, as specified.
This bill would revise and recast the provisions relating to the process for the Labor Commissioner to investigate, hold a hearing, and make determinations relating to an employees complaint. The bill would set forth timelines for the Labor Commissioner to notify parties of an employee complaint, as provided, and for the defendant to respond, as provided. The bill would require the Labor Commissioner, if the Labor Commissioner determines to prosecute the action or that no action will be taken, to notify the parties within 30 days of receipt of the defendants answer. If the Labor Commissioner does not make either of those determinations, the bill would require the Labor Commissioner, within 90 days of receipt of the defendants answer, to conduct an investigation of the employee complaint, make an estimated appraisal of the amount of wages, damages, penalties, expenses, and other compensation owed, and to determine all the parties liable for the assessment. The bill would set forth a process for the Labor Commissioners investigation, assessment, and determination, including authorizing the Labor Commissioner to issue a subpoena for records and requiring the Labor Commissioner to issue a formal complaint.
This bill would require the Labor Commissioner, within 90 days of the issuance of the formal complaint, to set a hearing date and would set forth procedures for the hearing. The bill would require the Labor Commissioner, within 15 days of the hearing, or upon a failure of the defendant to answer or appear, to file in the office of the Division of Labor Standards Enforcement a copy of the order, decision, or award.
This bill would require an order, decision, or award granted by the Labor Commissioner pursuant to specified provisions to impose an administrative fee payable in the amount of 30% of the order, decision, or award. The bill would require the administrative fee to be deposited into the Wage Recovery Fund, which would be created by the bill. The bill would require the money in the fund, upon appropriation, to be disbursed by the Labor Commissioner only to persons determined by the Labor Commissioner to have been damaged by the failure to pay wages and penalties and for other damages by an employer. The bill would require a disbursement to be made pursuant to a claim for recovery from the fund in accordance with procedures prescribed by the Labor Commissioner and would require any disbursed funds subsequently recovered by the Labor Commissioner from a liable party, as provided, to be returned to the fund. The bill would authorize the Labor Commissioner to waive any or all of the administrative fee upon request by a defendant, if specified conditions are met.
This bill would classify an appeal filed in a superior court relating to the Labor Commissioners order, decision, or award as an unlimited civil case. The bill would grant a court hearing the action jurisdiction over the entire wage dispute, including related wage claims not raised in front of the Labor Commissioner, but would prohibit the court from consolidating the action with any other actions not arising out of, or related to, the underlying order, decision, or award, absent an executed agreement in writing by all parties.
Existing law authorizes the Labor Commissioner to investigate employee complaints and to provide for a hearing in any action to recover wages, penalties, and other demands for compensation. Existing law requires the Labor Commissioner to determine all matters arising under the commissioners jurisdiction. Existing law makes any employer or other person acting on behalf of an employer who violates or causes to be violated specified provisions regulating hours and days of work in any order of the Industrial Welfare Commission to be subject to a civil penalty, as specified.
This bill would revise and recast the provisions relating to the process for the Labor Commissioner to investigate, hold a hearing, and make determinations relating to an employees complaint. The bill would set forth timelines for the Labor Commissioner to notify parties of an employee complaint, as provided, and for the defendant to respond, as provided. The bill would require the Labor Commissioner, if the Labor Commissioner determines to prosecute the action or that no action will be taken, to notify the parties within 30 days of receipt of the defendants answer. If the Labor Commissioner does not make either of those determinations, the bill would require the Labor Commissioner, within 90 days of receipt of the defendants answer, to conduct an investigation of the employee complaint, make an assessment estimated appraisal of the amount of wages, damages, penalties, expenses, and other compensation owed, and to determine all the parties liable for the assessment. The bill would set forth a process for the Labor Commissioners investigation, assessment, and determination, including authorizing the Labor Commissioner to issue a subpoena for records and requiring the Labor Commissioner to issue a formal complaint.
This bill would require the Labor Commissioner, within 90 days of the issuance of the formal complaint, to set a hearing date and would set forth procedures for the hearing. The bill would require the Labor Commissioner, within 15 days of the hearing, or upon a failure of the defendant to answer or appear, to file in the office of the Division of Labor Standards Enforcement a copy of the order, decision, or award.
This bill would require an award granted by the Labor Commissioner pursuant to specified provisions to impose an administrative fee payable in the amount of 30% of the order, decision, or award. The bill would require the administrative fee to be deposited into the Wage Recovery Fund, which would be created by the bill. The bill would authorize require the money in the fund to be available, fund, upon appropriation, to the Labor Commissioner to compensate the Labor Commissioner for the staffing required to investigate and recover wages and penalties owed to aggrieved employees. to be disbursed by the Labor Commissioner only to persons determined by the Labor Commissioner to have been damaged by the failure to pay wages and penalties and for other damages by an employer. The bill would require a disbursement to be made pursuant to a claim for recovery from the fund in accordance with procedures prescribed by the Labor Commissioner and would require any disbursed funds subsequently recovered by the Labor Commissioner from a liable party, as provided, to be returned to the fund.
This bill would classify an appeal filed in a superior court relating to the Labor Commissioners order, decision, or award as an unlimited civil case. The bill would grant a court hearing the action jurisdiction over the entire wage dispute, including related wage claims not raised in front of the Labor Commissioner, but would prohibit the court from consolidating the action with any other actions not arising out of, or related to, the underlying order, decision, or award, absent an executed agreement in writing by all parties.
Existing law authorizes the Labor Commissioner to investigate employee complaints and to provide for a hearing in any action to recover wages, penalties, and other demands for compensation. Existing law requires the Labor Commissioner to determine all matters arising under the commissioners jurisdiction. Existing law makes any employer or other person acting on behalf of an employer who violates or causes to be violated specified provisions regulating hours and days of work in any order of the Industrial Welfare Commission to be subject to a civil penalty, as specified.
This bill would revise and recast the provisions relating to the process for the Labor Commissioner to investigate, hold a hearing, and make determinations relating to an employees complaint. The bill would set forth timelines for the Labor Commissioner to notify parties of an employee complaint, and for the defendant to respond, as provided. The bill would require the Labor Commissioner, if the Labor Commissioner determines to prosecute the action or that no action will be taken, to notify the parties within 30 days of receipt of the defendants answer. If the Labor Commissioner does not make either of those determinations, the bill would require the Labor Commissioner, within 90 days of receipt of the defendants answer, to conduct an investigation of the employee complaint, make an assessment of the amount of wages, damages, penalties, expenses, and other compensation owed, and to determine all the parties liable for the assessment. The bill would set forth a process for the Labor Commissioners investigation, assessment, and determination, including authorizing the Labor Commissioner to issue a subpoena for records and requiring the Labor Commissioner to issue a formal complaint.
This bill would require the Labor Commissioner, within 90 days of the issuance of the formal complaint, to set a hearing date and would set forth procedures for the hearing. The bill would require the Labor Commissioner, within 15 days of the hearing, or upon a failure of the defendant to answer or appear, to file in the office of the Division of Labor Standards Enforcement a copy of the order, decision, or award.
This bill would require an award granted by the Labor Commissioner pursuant to specified provisions to impose an administrative fee payable in the amount of 30% of the order, decision, or award. The bill would require the administrative fee to be deposited into the Wage Recovery Fund, which would be created by the bill. The bill would authorize the money in the fund to be available, upon appropriation, to the Labor Commissioner to compensate the Labor Commissioner for the staffing required to investigate and recover wages and penalties owed to aggrieved employees.
This bill would classify an appeal filed in a superior court relating to the Labor Commissioners order, decision, or award as an unlimited civil case. The bill would grant a court hearing the action jurisdiction over the entire wage dispute, including related wage claims not raised in front of the Labor Commissioner, but would prohibit the court from consolidating the action with any other actions not arising out of, or related to, the underlying order, decision, or award, absent an executed agreement in writing by all parties.
(a)(1)(A)The Labor Commissioner is authorized to investigate employee complaints. The Labor Commissioner may provide for a hearing in any action to recover wages, penalties, and other demands for compensation, including liquidated damages if the employee complaint alleges payment of a wage less than the minimum wage fixed by an order of the Industrial Welfare Commission or by statute, properly before the division or the Labor Commissioner, including orders of the Industrial Welfare Commission, and shall determine all matters arising under the Labor Commissioners jurisdiction.
(B)The Labor Commissioner may also provide for a hearing to recover civil penalties due pursuant to Section 558 against any employer or other person acting on behalf of an employer, including, but not limited to, an individual liable pursuant to Section 558.1.
(C)It is within the jurisdiction of the Labor Commissioner to accept and determine claims from holders of payroll checks or payroll drafts returned unpaid because of insufficient funds, if, after a diligent search, the holder is unable to return the dishonored check or draft to the payee and recover the sums paid out.
(D)For the purpose of calculating the statute of limitations for any employee complaint investigated under this section, the action shall commence upon the filing of the employee complaint.
(2)If the Labor Commissioner determines that no further action will be taken on the employee complaint, the Labor Commissioner shall, within 30 days of the receipt of an employee complaint, notify the complainant of the determination. If the Labor Commissioner declines to continue to investigate an employee complaint, the claimant may pursue remedies through any alternative forum available with the tolling of the statute of limitations based on the date the employee complaint was made, so long as the subsequent action is commenced within one year of the date the notice was provided pursuant to this subdivision.
(3)If the Labor Commissioner does not make a determination pursuant to paragraph (2) that no further action will be taken, the Labor Commissioner shall, within 60 days of receipt of an employee complaint, notify all parties against which the employee complaint has been filed of the allegations asserted in the complaint, including the total amount of wages, penalties, and other demands for compensation alleged due. If the employee complaint did not include the complainants best estimate of wages and penalties owed, the Labor Commissioner may calculate a monetary value based on the complainants allegations and any investigation it has conducted within the time period allowed. The notice shall identify the Labor Code section under which the claimant asserts the defendants liability if it is ascertainable from the employees complaint or if it is ascertainable from other available information within the time period allowed.
(4)Within 30 days of transmittal of the notice described in paragraph (3), the defendants shall respond by either paying the full amount due as described in the notice or by filing an answer with the Labor Commissioner. An answer shall, at a minimum, include both of the following:
(A)Whether the defendant admits to employing the complainant during any period alleged in the notice.
(i)If the defendant denies an employment relationship based on a workers classification as an independent contractor, the defendant shall provide facts to demonstrate that the classification meets the requirements in Article 1.5 (commencing with Section 2775) of Chapter 2 of Division 3.
(ii)If the defendant denies an employment relationship for a reason other than as specified in clause (i), the defendant shall name any and all known employers of the complainant or other parties potentially liable for the violations during the claim period, and shall include their contact information.
(B)Whether the defendant admits or denies owing any amount to the complainant.
(i)For any admission of an amount owed, the Labor Commissioner may issue an order, decision, or award for that amount as set forth in Section 98.1. The order, decision, or award may be appealed under Section 98.2. The Labor Commissioner may continue to investigate any claims for which the defendant did not admit to owing.
(ii)For any denial of liability for wages, penalties, and other demands for compensation alleged, the defendants shall set forth the particulars in which the employee complaint is inaccurate or incomplete and the facts upon which the defendant intends to rely.
(5)If the defendant fails to provide an answer within 30 days of transmittal of the notice described in paragraph (3), the Labor Commissioner shall issue an order, decision, or award in the amount stated in the notice, as set forth in Section 98.1. The order, decision, or award may be appealed under Section 98.2. If the defendant provides an answer, but the answer does not meet the requirements of this section, the Labor Commissioner may provide the defendant with 15 additional days to submit a revised answer. After the 15 days, if the defendant fails to provide an answer within the requirements of this section, the Labor Commissioner shall issue an order, decision, or award in the amount stated in the notice described in paragraph (3), as set forth in Section 98.1. The order, decision, or award may be appealed under Section 98.2.
(6)The Labor Commissioner may request an answer from any new party added to the employee complaint at any point in the investigation by issuing a notice of claim to that employer within 60 days of the employer being added to the employee complaint. The notice of claim shall include the information specified in paragraph (3). The employers response to the notice of claim shall be governed by paragraphs (4) and (5).
(b)If the Labor Commissioner determines to take action in accordance with Section 98.3 or determines that no further action will be taken on the employee complaint, the Labor Commissioner shall, within 30 days of the receipt of the answer, notify all parties of the determination. If the Labor Commissioner declines to continue to investigate an employee complaint, the claimant may pursue remedies through any alternative forum available with the tolling of the statute of limitations based on the date the employee complaint was made, so long as the subsequent action is commenced within one year of the date the notice was provided pursuant to this subdivision.
(c)If the Labor Commissioner does not make a determination pursuant to subdivision (b), the Labor Commissioner shall conduct an investigation of the employee complaint. The Labor Commissioner shall make an estimated appraisal of the amount of wages, damages, penalties, expenses, and other compensation owed and shall determine all the parties liable for the assessment. The investigation, assessment, and determination of liability shall be made within 90 days of the receipt of the answer described in paragraph (4) of subdivision (a), and shall be made through the following process:
(1)The Labor Commissioner may decide to hold a mandatory investigatory and settlement conference upon providing notice of the conference to the parties. If the claimant fails to attend the conference, the employee complaint may be dismissed unless a claimant can provide a good cause reason for their nonappearance. If the defendant fails to attend the settlement conference and does not provide a good cause reason for their nonappearance, the Labor Commissioner may issue an order, decision, or award in the amount stated in the notice provided by paragraph (3) of subdivision (a). The order, decision, or award shall be issued as set forth in Section 98.1 and may be appealed under Section 98.2. Upon agreement of the claimant, the Labor Commissioner may hold additional mandatory investigatory and settlement conferences if additional defendants are identified during the investigation of the employee complaint.
(2)The Labor Commissioner may issue a subpoena pursuant to Section 92 to a defendant requesting copies of records for the employee, as described in Section 226, during the claim period. The Labor Commissioner may also issue a subpoena pursuant to Section 92 for all records required to be maintained by the relevant wage order, and to any other parties or for any other information as determined by the Labor Commissioner.
(3)The Labor Commissioner shall issue a formal complaint that includes the allegations in the employee complaint concerning the time period of the claim, the laws violated, and all parties liable, and the amount of compensation requested, applicable interest, and administrative fees available under Section 98.1.
(d)Within 90 days of the issuance of the formal complaint described in paragraph (3) of subdivision (c), the Labor Commissioner shall set a hearing date and serve a copy of the formal complaint on all parties, along with a notice of the date, time, and place of the hearing. The Labor Commissioner may conduct the hearing in person, over the telephone, or via video conference.
(1)Within 10 days after service of the notice of the hearing and the formal complaint, a defendant may file an answer or a revised answer with the Labor Commissioner in any form as the Labor Commissioner may prescribe, setting forth the particulars in which the formal complaint is inaccurate or incomplete and the facts upon which the defendant intends to rely.
(2)No pleading other than the formal complaint and answer of the defendant or defendants shall be required. Both shall be in writing and shall conform to the form and the rules of practice and procedure adopted by the Labor Commissioner.
(3)Evidence on matters not pleaded in the answer or produced in response to a subpoena issued by the Labor Commissioner shall be allowed only on terms and conditions the Labor Commissioner shall impose. In all these cases, the claimant shall be entitled to a continuance for purposes of review of the new evidence.
(4)If a defendant fails to appear, the Labor Commissioner may issue an order, decision, or award in the amount stated in the formal complaint issued pursuant to paragraph (3) of subdivision (c). The order, decision, or award shall be issued as set forth in Section 98.1, and may be appealed under Section 98.2.
(5)If a defendants records are inaccurate or inadequate as to the precise extent of work completed and compensated by the claimant, the claimant has carried out their burden of proof if they prove that they have in fact performed work for which they were improperly compensated and produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.
(e)A hearing conducted pursuant to this chapter is governed by the division and by the rules of practice and procedure adopted by the Labor Commissioner. It is the intent of the Legislature that hearings held pursuant to this section be conducted in an informal setting preserving the rights of the parties.
(f)A defendant failing to appear or answer, or subsequently contending to be aggrieved in any manner by want of notice of the pendency of the proceedings, may apply to the Labor Commissioner for relief in accordance with Section 473 of the Code of Civil Procedure. The Labor Commissioner may afford this relief. The Labor Commissioners authority to grant relief under this subdivision terminates upon the defendants filing of an appeal under Section 98.2. Absent an appeal under Section 98.2, no right to relief, including the claim that the findings or award of the Labor Commissioner or judgment entered thereon are void upon their face, shall accrue to the defendant in any court unless prior application is made to the Labor Commissioner in accordance with this chapter.
(g)(1)Whenever a claim is filed under this chapter against a person operating or doing business under a fictitious business name, as defined in Section 17900 of the Business and Professions Code, which relates to the persons business, the division shall inquire at any point during the procedures set forth in this section whether the name of the person is the legal name under which the business or person has been licensed, registered, incorporated, or otherwise authorized to do business.
(2)The division may amend an order, decision, or award to conform to the legal name of the business or the person who is the defendant to a wage claim, if it can be shown that proper service was made on the defendant or the defendants agent, unless a judgment had been entered on the order, decision, or award pursuant to subdivision (d) of Section 98.2. The Labor Commissioner may apply to the clerk of the superior court to amend a judgment that has been issued pursuant to a final order, decision, or award to conform to the legal name of the defendant, if it can be shown that proper service was made on the defendant or the defendants agent.
(h)A party who has received actual notice of a claim before the Labor Commissioner shall, while the matter is before the Labor Commissioner, notify the Labor Commissioner in writing of any change in that partys business or personal address within 10 days after the change in address occurs.
(i)The Labor Commissioners authority to investigate a claim or issue an order, decision, or award does not terminate upon the expiration of the deadlines set forth in this section.
(j)A notice required to be given pursuant to this section shall be given by personal service, first-class mail, certified mail, registered mail, in the manner specified in Section 415.20 of the Code of Civil Procedure, or by any manner that the party agrees to accept service, including, but not limited to, electronic service.
SEC. 2.Section 98.1 of the Labor Code is amended to read:98.1.(a)Within 15 days after the hearing described in Section 98 is concluded, or upon a failure to answer or appear as described in Section 98, the Labor Commissioner shall file in the office of the division a copy of the order, decision, or award. Upon filing of the order, decision, or award, the Labor Commissioner shall serve a copy of the decision on the parties by personal service, first-class mail, certified mail, or registered mail, in the manner specified in Section 415.20 of the Code of Civil Procedure, or by any manner that a party agrees to accept service, including, but not limited to, electronic service. The notice shall also advise the parties of their right to appeal the decision or award and further advise the parties that failure to do so within the period prescribed by this chapter shall result in the decision or award becoming final and enforceable as a judgment by the superior court.
(b)For the purpose of this section, an order, decision, or award shall include any sums found owing, damages proved, interest accrued, any penalties awarded pursuant to this code, and the reasons for the decision. An order, decision, or award issued under this section shall be deemed a determination of the defendants liability for the unpaid wages specified in the order, decision, or award.
(c)All awards granted pursuant to a hearing under this chapter shall accrue interest on all due and unpaid wages at the same rate as prescribed by subdivision (b) of Section 3289 of the Civil Code. The interest shall accrue until the wages are paid from the date that the wages were due and payable as provided in Part 1 (commencing with Section 200) of Division 2.
(d)(1)An order, decision, or award granted under this chapter shall impose an administrative fee payable in the amount of 30 percent of the order, decision, or award. The administrative fee shall be deposited into the Wage Recovery Fund, which is hereby created.(d)(1)(A)In an order, decision, or award granted under this chapter, the Labor Commissioner may impose an administrative fee of up to 30 percent of the amount awarded, based on the circumstances giving rise to the claim and the facts as presented during the investigation or hearing of the claim. In exercising this discretion, the Labor Commissioner shall not request, receive, or consider additional evidence beyond that necessary to determine the merits of the wage claim. The administrative fee shall be deposited into the Wage Recovery Fund, which is hereby created.
(B)If a party appeals the order pursuant to Section 98.2, the amount of the administrative fee shall be adjusted proportionally to the final award, but the court shall not alter the percentage of the administrative fee as determined by the Labor Commissioner.
(2)Upon appropriation by the Legislature for this express purpose, all money in the Wage Recovery Fund shall be disbursed by the Labor Commissioner only to persons determined by the Labor Commissioner to have been damaged by the failure to pay wages and penalties and for other damages by an employer.
(3)Any disbursement shall be made pursuant to a claim for recovery from the fund in accordance with procedures prescribed by the Labor Commissioner.
(4)Any disbursed funds subsequently recovered by the Labor Commissioner from a liable party pursuant to an assignment of the claim to the Labor Commissioner for recovery of due amounts shall be returned to the fund.
(5)Upon a request by a defendant at a hearing held pursuant to subdivision (d) of Section 98, the Labor Commissioner shall waive any or all of the administrative fee, provided that all of the following are satisfied:
(A)The order, decision, or award issued under this chapter does not impose liability for penalties pursuant to Section 203.
(B)The defendant shall attest in writing that they do not have a prior order, decision, award, or judgment issued against them within the past 10 years for engaging in illegal conduct related to a dispute over wages or other violations under the jurisdiction of the Labor Commissioner.
(C)The defendant shall attest in writing that they have not entered into a settlement agreement within the past 10 years concerning prior illegal conduct related to a dispute over wages or other violations under the jurisdiction of the Labor Commissioner. A payment made pursuant to paragraph (4) of subdivision (a) of Section 98 does not constitute a settlement agreement for purposes of this subparagraph.
SEC. 3.Section 98.2 of the Labor Code is amended to read:98.2.(a)Within 10 days after service of notice of an order, decision, or award the parties may seek review by filing an appeal to the superior court, where the appeal shall be heard de novo. The court shall charge the first paper filing fee under Section 70611 of the Government Code to the party seeking review. The fee shall be distributed as provided in Section 68085.3 of the Government Code. A copy of the appeal request shall be served upon the Labor Commissioner by the appellant. For purposes of computing the 10-day period after service, Section 1013 of the Code of Civil Procedure is applicable. An appeal filed under this section shall be classified as an unlimited civil case.
(b)As a condition to filing an appeal pursuant to this section, each appealing defendant shall first post an undertaking with the reviewing court in the amount of the order, decision, or award. The undertaking shall consist of an appeal bond issued by a licensed surety or a cash deposit with the court in the amount of the order, decision, or award. The appealing defendant shall provide written notification to the other parties and the Labor Commissioner of the posting of the undertaking. The undertaking shall be on the condition that, if any judgment is entered in favor of the employee, the appealing defendant shall pay the amount owed pursuant to the judgment, and if the appeal is withdrawn or dismissed without entry of judgment, the appealing defendant shall pay the amount owed pursuant to the order, decision, or award of the Labor Commissioner unless the parties have executed a settlement agreement for payment of some other amount, in which case the appealing defendant shall pay the amount that the appealing defendant is obligated to pay under the terms of the settlement agreement. If the appealing defendant fails to pay the amount owed within 10 days of entry of the judgment, dismissal, or withdrawal of the appeal, or the execution of a settlement agreement, a portion of the undertaking equal to the amount owed, or the entire undertaking if the amount owed exceeds the undertaking, is forfeited to the employee.
(c)If the party seeking review by filing an appeal to the superior court is unsuccessful in the appeal, the court shall determine the costs and reasonable attorneys fees incurred by the other parties to the appeal, and assess that amount as a cost upon the party filing the appeal. A party seeking appeal is unsuccessful if they withdraw their appeal without a judgment. An employee is successful if the court awards, or a defendant voluntarily pays, an amount greater than zero.
(d)If no notice of appeal of the order, decision, or award is filed within the period set forth in subdivision (a), the order, decision, or award shall, in the absence of fraud, be deemed the final order.
(e)A court hearing an action filed under this section has jurisdiction over the entire wage dispute, including related wage claims not raised in front of the Labor Commissioner.
(f)A court shall not consolidate an action filed under this section with any other action not arising out of, or related to, the wage claim covered by underlying order, decision, or award absent an executed agreement in writing by all parties.
(g)(1)The Labor Commissioner shall file, within 10 days of the order becoming final pursuant to subdivision (d), a certified copy of the final order with the clerk of the superior court of the appropriate county unless a settlement has been reached by the parties and approved by the Labor Commissioner. Judgment shall be entered immediately by the court clerk in conformity therewith. The judgment so entered has the same force and effect as, and is subject to all of the provisions of law relating to, a judgment in a civil action, and may be enforced in the same manner as any other judgment of the court in which it is entered. Enforcement of the judgment shall receive court priority.
(2)Notwithstanding paragraph (1), a court shall grant an application filed by the Labor Commissioner to vacate a judgment deemed final under paragraph (1) upon the Labor Commissioners granting of relief under subdivision (f) of Section 98.
(h)(1)In order to ensure that judgments are satisfied, the Labor Commissioner may serve upon the judgment debtor, personally or by first-class mail at the last known address of the judgment debtor listed with the division, a form similar to, and requiring the reporting of the same information as, the form approved or adopted by the Judicial Council for purposes of subdivision (a) of Section 116.830 of the Code of Civil Procedure to assist in identifying the nature and location of any assets of the judgment debtor.
(2)The judgment debtor shall complete the form and cause it to be delivered to the division at the address listed on the form within 35 days after the form has been served on the judgment debtor, unless the judgment has been satisfied. In case of willful failure by the judgment debtor to comply with this subdivision, the division or the judgment creditor may request the court to apply the sanctions provided in Section 708.170 of the Code of Civil Procedure.
(i)(1)As an alternative to a judgment lien, upon the order becoming final pursuant to subdivision (d), a lien on real property may be created by the Labor Commissioner recording a certificate of lien, for amounts due under the final order and in favor of the employee or employees named in the order, with the county recorder of any county in which the employers real property may be located, at the Labor Commissioners discretion and depending upon information the Labor Commissioner obtains concerning the employers assets. The lien attaches to all interests in real property of the employer located in the county where the lien is created to which a judgment lien may attach pursuant to Section 697.340 of the Code of Civil Procedure.
(2)The certificate of lien shall include information as prescribed by Section 27288.1 of the Government Code.
(3)The recorder shall accept and record the certificate of lien and shall index it as prescribed by law.
(4)Upon payment of the amount due under the final order, the Labor Commissioner shall issue a certificate of release, releasing the lien created under paragraph (1). The certificate of release may be recorded by the employer at the employers expense.
(5)Unless the lien is satisfied or released, a lien under this section shall continue until 10 years from the date of its creation.
(j)Notwithstanding subdivision (g), the Labor Commissioner may stay execution of any judgment entered upon an order, decision, or award that has become final upon good cause appearing therefor and may impose the terms and conditions of the stay of execution. A certified copy of the stay of execution shall be filed with the clerk entering the judgment.
(k)When a judgment is satisfied in fact, other than by execution, the Labor Commissioner may, upon the motion of either party or on its own motion, order entry of satisfaction of judgment. The clerk of the court shall enter a satisfaction of judgment upon the filing of a certified copy of the order.
(l)The Labor Commissioner shall make every reasonable effort to ensure that judgments are satisfied, including taking all appropriate legal action and requiring the employer to deposit a bond as provided in Section 240.
(m)The judgment creditor, or the Labor Commissioner as assignee of the judgment creditor, is entitled to court costs and reasonable attorneys fees for enforcing the judgment that is rendered pursuant to this section.
(a)(1)(A)The Labor Commissioner is authorized to investigate employee complaints. The Labor Commissioner may provide for a hearing in any action to recover wages, penalties, and other demands for compensation, including liquidated damages if the employee complaint alleges payment of a wage less than the minimum wage fixed by an order of the Industrial Welfare Commission or by statute, properly before the division or the Labor Commissioner, including orders of the Industrial Welfare Commission, and shall determine all matters arising under the Labor Commissioners jurisdiction.
(B)The Labor Commissioner may also provide for a hearing to recover civil penalties due pursuant to Section 558 against any employer or other person acting on behalf of an employer, including, but not limited to, an individual liable pursuant to Section 558.1.
(C)It is within the jurisdiction of the Labor Commissioner to accept and determine claims from holders of payroll checks or payroll drafts returned unpaid because of insufficient funds, if, after a diligent search, the holder is unable to return the dishonored check or draft to the payee and recover the sums paid out.
(D)For the purpose of calculating the statute of limitations for any employee complaint investigated under this section, the action shall commence upon the filing of the employee complaint.
(2)If the Labor Commissioner determines that no further action will be taken on the employee complaint, the Labor Commissioner shall, within 30 days of the receipt of an employee complaint, notify the complainant of the determination. If the Labor Commissioner declines to continue to investigate an employee complaint, the claimant may pursue remedies through any alternative forum available with the tolling of the statute of limitations based on the date the employee complaint was made, so long as the subsequent action is commenced within one year of the date the notice was provided pursuant to this subdivision.
(3)If the Labor Commissioner does not make a determination pursuant to paragraph (2) that no further action will be taken, the Labor Commissioner shall, within 60 days of receipt of an employee complaint, notify all parties against which the employee complaint has been filed of the allegations asserted in the complaint, including the total amount of wages, penalties, and other demands for compensation alleged due. If the employee complaint did not include the complainants best estimate of wages and penalties owed, the Labor Commissioner may calculate a monetary value based on the complainants allegations and any investigation it has conducted within the time period allowed. The notice shall identify the Labor Code section under which the claimant asserts the defendants liability if it is ascertainable from the employees complaint or if it is ascertainable from other available information within the time period allowed.
(4)Within 30 days of transmittal of the notice described in paragraph (3), the defendants shall respond by either paying the full amount due as described in the notice or by filing an answer with the Labor Commissioner. An answer shall, at a minimum, include both of the following:
(A)Whether the defendant admits to employing the complainant during any period alleged in the notice.
(i)If the defendant denies an employment relationship based on a workers classification as an independent contractor, the defendant shall provide facts to demonstrate that the classification meets the requirements in Article 1.5 (commencing with Section 2775) of Chapter 2 of Division 3.
(ii)If the defendant denies an employment relationship for a reason other than as specified in clause (i), the defendant shall name any and all known employers of the complainant or other parties potentially liable for the violations during the claim period, and shall include their contact information.
(B)Whether the defendant admits or denies owing any amount to the complainant.
(i)For any admission of an amount owed, the Labor Commissioner may issue an order, decision, or award for that amount as set forth in Section 98.1. The order, decision, or award may be appealed under Section 98.2. The Labor Commissioner may continue to investigate any claims for which the defendant did not admit to owing.
(ii)For any denial of liability for wages, penalties, and other demands for compensation alleged, the defendants shall set forth the particulars in which the employee complaint is inaccurate or incomplete and the facts upon which the defendant intends to rely.
(5)If the defendant fails to provide an answer within 30 days of transmittal of the notice described in paragraph (3), the Labor Commissioner shall issue an order, decision, or award in the amount stated in the notice, as set forth in Section 98.1. The order, decision, or award may be appealed under Section 98.2. If the defendant provides an answer, but the answer does not meet the requirements of this section, the Labor Commissioner may provide the defendant with 15 additional days to submit a revised answer. After the 15 days, if the defendant fails to provide an answer within the requirements of this section, the Labor Commissioner shall issue an order, decision, or award in the amount stated in the notice described in paragraph (3), as set forth in Section 98.1. The order, decision, or award may be appealed under Section 98.2.
(6)The Labor Commissioner may request an answer from any new party added to the employee complaint at any point in the investigation by issuing a notice of claim to that employer within 60 days of the employer being added to the employee complaint. The notice of claim shall include the information specified in paragraph (3). The employers response to the notice of claim shall be governed by paragraphs (4) and (5).
(b)If the Labor Commissioner determines to take action in accordance with Section 98.3 or determines that no further action will be taken on the employee complaint, the Labor Commissioner shall, within 30 days of the receipt of the answer, notify all parties of the determination. If the Labor Commissioner declines to continue to investigate an employee complaint, the claimant may pursue remedies through any alternative forum available with the tolling of the statute of limitations based on the date the employee complaint was made, so long as the subsequent action is commenced within one year of the date the notice was provided pursuant to this subdivision.
(c)If the Labor Commissioner does not make a determination pursuant to subdivision (b), the Labor Commissioner shall conduct an investigation of the employee complaint. The Labor Commissioner shall make an estimated appraisal of the amount of wages, damages, penalties, expenses, and other compensation owed and shall determine all the parties liable for the assessment. The investigation, assessment, and determination of liability shall be made within 90 days of the receipt of the answer described in paragraph (4) of subdivision (a), and shall be made through the following process:
(1)The Labor Commissioner may decide to hold a mandatory investigatory and settlement conference upon providing notice of the conference to the parties. If the claimant fails to attend the conference, the employee complaint may be dismissed unless a claimant can provide a good cause reason for their nonappearance. If the defendant fails to attend the settlement conference and does not provide a good cause reason for their nonappearance, the Labor Commissioner may issue an order, decision, or award in the amount stated in the notice provided by paragraph (3) of subdivision (a). The order, decision, or award shall be issued as set forth in Section 98.1 and may be appealed under Section 98.2. Upon agreement of the claimant, the Labor Commissioner may hold additional mandatory investigatory and settlement conferences if additional defendants are identified during the investigation of the employee complaint.
(2)The Labor Commissioner may issue a subpoena pursuant to Section 92 to a defendant requesting copies of records for the employee, as described in Section 226, during the claim period. The Labor Commissioner may also issue a subpoena pursuant to Section 92 for all records required to be maintained by the relevant wage order, and to any other parties or for any other information as determined by the Labor Commissioner.
(3)The Labor Commissioner shall issue a formal complaint that includes the allegations in the employee complaint concerning the time period of the claim, the laws violated, and all parties liable, and the amount of compensation requested, applicable interest, and administrative fees available under Section 98.1.
(d)Within 90 days of the issuance of the formal complaint described in paragraph (3) of subdivision (c), the Labor Commissioner shall set a hearing date and serve a copy of the formal complaint on all parties, along with a notice of the date, time, and place of the hearing. The Labor Commissioner may conduct the hearing in person, over the telephone, or via video conference.
(1)Within 10 days after service of the notice of the hearing and the formal complaint, a defendant may file an answer or a revised answer with the Labor Commissioner in any form as the Labor Commissioner may prescribe, setting forth the particulars in which the formal complaint is inaccurate or incomplete and the facts upon which the defendant intends to rely.
(2)No pleading other than the formal complaint and answer of the defendant or defendants shall be required. Both shall be in writing and shall conform to the form and the rules of practice and procedure adopted by the Labor Commissioner.
(3)Evidence on matters not pleaded in the answer or produced in response to a subpoena issued by the Labor Commissioner shall be allowed only on terms and conditions the Labor Commissioner shall impose. In all these cases, the claimant shall be entitled to a continuance for purposes of review of the new evidence.
(4)If a defendant fails to appear, the Labor Commissioner may issue an order, decision, or award in the amount stated in the formal complaint issued pursuant to paragraph (3) of subdivision (c). The order, decision, or award shall be issued as set forth in Section 98.1, and may be appealed under Section 98.2.
(5)If a defendants records are inaccurate or inadequate as to the precise extent of work completed and compensated by the claimant, the claimant has carried out their burden of proof if they prove that they have in fact performed work for which they were improperly compensated and produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.
(e)A hearing conducted pursuant to this chapter is governed by the division and by the rules of practice and procedure adopted by the Labor Commissioner. It is the intent of the Legislature that hearings held pursuant to this section be conducted in an informal setting preserving the rights of the parties.
(f)A defendant failing to appear or answer, or subsequently contending to be aggrieved in any manner by want of notice of the pendency of the proceedings, may apply to the Labor Commissioner for relief in accordance with Section 473 of the Code of Civil Procedure. The Labor Commissioner may afford this relief. The Labor Commissioners authority to grant relief under this subdivision terminates upon the defendants filing of an appeal under Section 98.2. Absent an appeal under Section 98.2, no right to relief, including the claim that the findings or award of the Labor Commissioner or judgment entered thereon are void upon their face, shall accrue to the defendant in any court unless prior application is made to the Labor Commissioner in accordance with this chapter.
(g)(1)Whenever a claim is filed under this chapter against a person operating or doing business under a fictitious business name, as defined in Section 17900 of the Business and Professions Code, which relates to the persons business, the division shall inquire at any point during the procedures set forth in this section whether the name of the person is the legal name under which the business or person has been licensed, registered, incorporated, or otherwise authorized to do business.
(2)The division may amend an order, decision, or award to conform to the legal name of the business or the person who is the defendant to a wage claim, if it can be shown that proper service was made on the defendant or the defendants agent, unless a judgment had been entered on the order, decision, or award pursuant to subdivision (d) of Section 98.2. The Labor Commissioner may apply to the clerk of the superior court to amend a judgment that has been issued pursuant to a final order, decision, or award to conform to the legal name of the defendant, if it can be shown that proper service was made on the defendant or the defendants agent.
(h)A party who has received actual notice of a claim before the Labor Commissioner shall, while the matter is before the Labor Commissioner, notify the Labor Commissioner in writing of any change in that partys business or personal address within 10 days after the change in address occurs.
(i)The Labor Commissioners authority to investigate a claim or issue an order, decision, or award does not terminate upon the expiration of the deadlines set forth in this section.
(j)A notice required to be given pursuant to this section shall be given by personal service, first-class mail, certified mail, registered mail, in the manner specified in Section 415.20 of the Code of Civil Procedure, or by any manner that the party agrees to accept service, including, but not limited to, electronic service.
SEC. 2.Section 98.1 of the Labor Code is amended to read:98.1.(a)Within 15 days after the hearing described in Section 98 is concluded, or upon a failure to answer or appear as described in Section 98, the Labor Commissioner shall file in the office of the division a copy of the order, decision, or award. Upon filing of the order, decision, or award, the Labor Commissioner shall serve a copy of the decision on the parties by personal service, first-class mail, certified mail, or registered mail, in the manner specified in Section 415.20 of the Code of Civil Procedure, or by any manner that a party agrees to accept service, including, but not limited to, electronic service. The notice shall also advise the parties of their right to appeal the decision or award and further advise the parties that failure to do so within the period prescribed by this chapter shall result in the decision or award becoming final and enforceable as a judgment by the superior court.
(b)For the purpose of this section, an order, decision, or award shall include any sums found owing, damages proved, interest accrued, any penalties awarded pursuant to this code, and the reasons for the decision. An order, decision, or award issued under this section shall be deemed a determination of the defendants liability for the unpaid wages specified in the order, decision, or award.
(c)All awards granted pursuant to a hearing under this chapter shall accrue interest on all due and unpaid wages at the same rate as prescribed by subdivision (b) of Section 3289 of the Civil Code. The interest shall accrue until the wages are paid from the date that the wages were due and payable as provided in Part 1 (commencing with Section 200) of Division 2.
(d)(1)An order, decision, or award granted under this chapter shall impose an administrative fee payable in the amount of 30 percent of the order, decision, or award. The administrative fee shall be deposited into the Wage Recovery Fund, which is hereby created.
(2)Upon appropriation by the Legislature for this express purpose, all money in the Wage Recovery Fund shall be disbursed by the Labor Commissioner only to persons determined by the Labor Commissioner to have been damaged by the failure to pay wages and penalties and for other damages by an employer.
(3)Any disbursement shall be made pursuant to a claim for recovery from the fund in accordance with procedures prescribed by the Labor Commissioner.
(4)Any disbursed funds subsequently recovered by the Labor Commissioner from a liable party pursuant to an assignment of the claim to the Labor Commissioner for recovery of due amounts shall be returned to the fund.
(5)Upon a request by a defendant at a hearing held pursuant to subdivision (d) of Section 98, the Labor Commissioner may shall waive any or all of the administrative fee, provided that all of the following are satisfied:
(A)The order, decision, or award issued under this chapter does not impose liability for penalties pursuant to Section 203.
(B)The defendant shall attest in writing that they do not have a prior order, decision, award, or judgment issued against them within the past 10 years for engaging in illegal conduct related to a dispute over wages or other violations under the jurisdiction of the Labor Commissioner.
(C)The defendant shall attest in writing that they have not entered into a settlement agreement within the past 10 years concerning prior illegal conduct related to a dispute over wages or other violations under the jurisdiction of the Labor Commissioner. A payment made pursuant to paragraph (4) of subdivision (a) of Section 98 does not constitute a settlement agreement for purposes of this subparagraph.
SEC. 3.Section 98.2 of the Labor Code is amended to read:98.2.(a)Within 10 days after service of notice of an order, decision, or award the parties may seek review by filing an appeal to the superior court, where the appeal shall be heard de novo. The court shall charge the first paper filing fee under Section 70611 of the Government Code to the party seeking review. The fee shall be distributed as provided in Section 68085.3 of the Government Code. A copy of the appeal request shall be served upon the Labor Commissioner by the appellant. For purposes of computing the 10-day period after service, Section 1013 of the Code of Civil Procedure is applicable. An appeal filed under this section shall be classified as an unlimited civil case.
(b)As a condition to filing an appeal pursuant to this section, each appealing defendant shall first post an undertaking with the reviewing court in the amount of the order, decision, or award. The undertaking shall consist of an appeal bond issued by a licensed surety or a cash deposit with the court in the amount of the order, decision, or award. The appealing defendant shall provide written notification to the other parties and the Labor Commissioner of the posting of the undertaking. The undertaking shall be on the condition that, if any judgment is entered in favor of the employee, the appealing defendant shall pay the amount owed pursuant to the judgment, and if the appeal is withdrawn or dismissed without entry of judgment, the appealing defendant shall pay the amount owed pursuant to the order, decision, or award of the Labor Commissioner unless the parties have executed a settlement agreement for payment of some other amount, in which case the appealing defendant shall pay the amount that the appealing defendant is obligated to pay under the terms of the settlement agreement. If the appealing defendant fails to pay the amount owed within 10 days of entry of the judgment, dismissal, or withdrawal of the appeal, or the execution of a settlement agreement, a portion of the undertaking equal to the amount owed, or the entire undertaking if the amount owed exceeds the undertaking, is forfeited to the employee.
(c)If the party seeking review by filing an appeal to the superior court is unsuccessful in the appeal, the court shall determine the costs and reasonable attorneys fees incurred by the other parties to the appeal, and assess that amount as a cost upon the party filing the appeal. A party seeking appeal is unsuccessful if they withdraw their appeal without a judgment. An employee is successful if the court awards, or a defendant voluntarily pays, an amount greater than zero.
(d)If no notice of appeal of the order, decision, or award is filed within the period set forth in subdivision (a), the order, decision, or award shall, in the absence of fraud, be deemed the final order.
(e)A court hearing an action filed under this section has jurisdiction over the entire wage dispute, including related wage claims not raised in front of the Labor Commissioner.
(f)A court shall not consolidate an action filed under this section with any other action not arising out of, or related to, the wage claim covered by underlying order, decision, or award absent an executed agreement in writing by all parties.
(g)(1)The Labor Commissioner shall file, within 10 days of the order becoming final pursuant to subdivision (d), a certified copy of the final order with the clerk of the superior court of the appropriate county unless a settlement has been reached by the parties and approved by the Labor Commissioner. Judgment shall be entered immediately by the court clerk in conformity therewith. The judgment so entered has the same force and effect as, and is subject to all of the provisions of law relating to, a judgment in a civil action, and may be enforced in the same manner as any other judgment of the court in which it is entered. Enforcement of the judgment shall receive court priority.
(2)Notwithstanding paragraph (1), a court shall grant an application filed by the Labor Commissioner to vacate a judgment deemed final under paragraph (1) upon the Labor Commissioners granting of relief under subdivision (f) of Section 98.
(f)
(h)(1)In order to ensure that judgments are satisfied, the Labor Commissioner may serve upon the judgment debtor, personally or by first-class mail at the last known address of the judgment debtor listed with the division, a form similar to, and requiring the reporting of the same information as, the form approved or adopted by the Judicial Council for purposes of subdivision (a) of Section 116.830 of the Code of Civil Procedure to assist in identifying the nature and location of any assets of the judgment debtor.
(2)The judgment debtor shall complete the form and cause it to be delivered to the division at the address listed on the form within 35 days after the form has been served on the judgment debtor, unless the judgment has been satisfied. In case of willful failure by the judgment debtor to comply with this subdivision, the division or the judgment creditor may request the court to apply the sanctions provided in Section 708.170 of the Code of Civil Procedure.
(g)
(i)(1)As an alternative to a judgment lien, upon the order becoming final pursuant to subdivision (d), a lien on real property may be created by the Labor Commissioner recording a certificate of lien, for amounts due under the final order and in favor of the employee or employees named in the order, with the county recorder of any county in which the employers real property may be located, at the Labor Commissioners discretion and depending upon information the Labor Commissioner obtains concerning the employers assets. The lien attaches to all interests in real property of the employer located in the county where the lien is created to which a judgment lien may attach pursuant to Section 697.340 of the Code of Civil Procedure.
(2)The certificate of lien shall include information as prescribed by Section 27288.1 of the Government Code.
(3)The recorder shall accept and record the certificate of lien and shall index it as prescribed by law.
(4)Upon payment of the amount due under the final order, the Labor Commissioner shall issue a certificate of release, releasing the lien created under paragraph (1). The certificate of release may be recorded by the employer at the employers expense.
(5)Unless the lien is satisfied or released, a lien under this section shall continue until 10 years from the date of its creation.
(h)
(j)Notwithstanding subdivision (e), (g), the Labor Commissioner may stay execution of any judgment entered upon an order, decision, or award that has become final upon good cause appearing therefor and may impose the terms and conditions of the stay of execution. A certified copy of the stay of execution shall be filed with the clerk entering the judgment.
(i)
(k)When a judgment is satisfied in fact, other than by execution, the Labor Commissioner may, upon the motion of either party or on its own motion, order entry of satisfaction of judgment. The clerk of the court shall enter a satisfaction of judgment upon the filing of a certified copy of the order.
(j)
(l)The Labor Commissioner shall make every reasonable effort to ensure that judgments are satisfied, including taking all appropriate legal action and requiring the employer to deposit a bond as provided in Section 240.
(k)
(m)The judgment creditor, or the Labor Commissioner as assignee of the judgment creditor, is entitled to court costs and reasonable attorneys fees for enforcing the judgment that is rendered pursuant to this section.
(a)(1)(A)The Labor Commissioner is authorized to investigate employee complaints. The Labor Commissioner may provide for a hearing in any action to recover wages, penalties, and other demands for compensation, including liquidated damages if the employee complaint alleges payment of a wage less than the minimum wage fixed by an order of the Industrial Welfare Commission or by statute, properly before the division or the Labor Commissioner, including orders of the Industrial Welfare Commission, and shall determine all matters arising under the Labor Commissioners jurisdiction.
(B)The Labor Commissioner may also provide for a hearing to recover civil penalties due pursuant to Section 558 against any employer or other person acting on behalf of an employer, including, but not limited to, an individual liable pursuant to Section 558.1.
(C)It is within the jurisdiction of the Labor Commissioner to accept and determine claims from holders of payroll checks or payroll drafts returned unpaid because of insufficient funds, if, after a diligent search, the holder is unable to return the dishonored check or draft to the payee and recover the sums paid out.
(D)For the purpose of calculating the statute of limitations for any employee complaint investigated under this section, the action shall commence upon the filing of the employee complaint.
(2)If the Labor Commissioner determines that no further action will be taken on the employee complaint, the Labor Commissioner shall, within 30 days of the receipt of an employee complaint, notify the complainant of the determination. If the Labor Commissioner declines to continue to investigate an employee complaint, the claimant may pursue remedies through any alternative forum available with the tolling of the statute of limitations based on the date the employee complaint was made, so long as the subsequent action is commenced within one year of the date the notice was provided pursuant to this subdivision.
(3)If the Labor Commissioner does not make a determination pursuant to paragraph (2) that no further action will be taken, the Labor Commissioner shall, within 60 days of receipt of an employee complaint, notify all parties against which the employee complaint has been filed of the allegations asserted in the complaint, including the total amount of wages, penalties, and other demands for compensation alleged due. If the employee complaint did not include the complainants best estimate of wages and penalties owed, the Labor Commissioner may calculate a monetary value based on the complainants allegations and any investigation it has conducted within the time period allowed. The notice shall identify the Labor Code section under which the claimant asserts the defendants liability if it is ascertainable from the employees complaint or if it is ascertainable from other available information within the time period allowed.
(4)Within 30 days of transmittal of the notice described in paragraph (3), the defendants shall respond by either paying the full amount due as described in the notice or by filing an answer with the Labor Commissioner. An answer shall, at a minimum, include both of the following:
(A)Whether the defendant admits to employing the complainant during any period alleged in the notice.
(i)If the defendant denies an employment relationship based on a workers classification as an independent contractor, the defendant shall provide facts to demonstrate that the classification meets the requirements in Article 1.5 (commencing with Section 2775) of Chapter 2 of Division 3.
(ii)If the defendant denies an employment relationship for a reason other than as specified in clause (i), the defendant shall name any and all known employers of the complainant or other parties potentially liable for the violations during the claim period, and shall include their contact information.
(B)Whether the defendant admits or denies owing any amount to the complainant.
(i)For any admission of an amount owed, the Labor Commissioner may issue an order, decision, or award for that amount as set forth in Section 98.1. The order, decision, or award may be appealed under Section 98.2. The Labor Commissioner may continue to investigate any claims for which the defendant did not admit to owing.
(ii)For any denial of liability for wages, penalties, and other demands for compensation alleged, the defendants shall set forth the particulars in which the employee complaint is inaccurate or incomplete and the facts upon which the defendant intends to rely.
(5)If the defendant fails to provide an answer within 30 days of transmittal of the notice described in paragraph (3), the Labor Commissioner shall issue an order, decision, or award in the amount stated in the notice, as set forth in Section 98.1. The order, decision, or award may be appealed under Section 98.2. If the defendant provides an answer, but the answer does not meet the requirements of this section, the Labor Commissioner may provide the defendant with 15 additional days to submit a revised answer. After the 15 days, if the defendant fails to provide an answer within the requirements of this section, the Labor Commissioner shall issue an order, decision, or award in the amount stated in the notice described in paragraph (3), as set forth in Section 98.1. The order, decision, or award may be appealed under Section 98.2.
(6)The Labor Commissioner may request an answer from any new party added to the employee complaint at any point in the investigation by issuing a notice of claim to that employer within 60 days of the employer being added to the employee complaint. The notice of claim shall include the information specified in paragraph (3). The employers response to the notice of claim shall be governed by paragraphs (4) and (5).
(b)If the Labor Commissioner determines to take action in accordance with Section 98.3 or determines that no further action will be taken on the employee complaint, the Labor Commissioner shall, within 30 days of the receipt of the answer, notify all parties of the determination. If the Labor Commissioner declines to continue to investigate an employee complaint, the claimant may pursue remedies through any alternative forum available with the tolling of the statute of limitations based on the date the employee complaint was made, so long as the subsequent action is commenced within one year of the date the notice was provided pursuant to this subdivision.
(c)If the Labor Commissioner does not make a determination pursuant to subdivision (b), the Labor Commissioner shall conduct an investigation of the employee complaint. The Labor Commissioner shall make an estimated appraisal of the amount of wages, damages, penalties, expenses, and other compensation owed and shall determine all the parties liable for the assessment. The investigation, assessment, and determination of liability shall be made within 90 days of the receipt of the answer described in paragraph (4) of subdivision (a), and shall be made through the following process:
(1)The Labor Commissioner may decide to hold a mandatory investigatory and settlement conference upon providing notice of the conference to the parties. If the claimant fails to attend the conference, the employee complaint may be dismissed unless a claimant can provide a good cause reason for their nonappearance. If the defendant fails to attend the settlement conference and does not provide a good cause reason for their nonappearance, the Labor Commissioner may issue an order, decision, or award in the amount stated in the notice provided by paragraph (3) of subdivision (a). The order, decision, or award shall be issued as set forth in Section 98.1 and may be appealed under Section 98.2. Upon agreement of the claimant, the Labor Commissioner may hold additional mandatory investigatory and settlement conferences if additional defendants are identified during the investigation of the employee complaint.
(2)The Labor Commissioner may issue a subpoena pursuant to Section 92 to a defendant requesting copies of records for the employee, as described in Section 226, during the claim period. The Labor Commissioner may also issue a subpoena pursuant to Section 92 for all records required to be maintained by the relevant wage order, and to any other parties or for any other information as determined by the Labor Commissioner.
(3)The Labor Commissioner shall issue a formal complaint that includes the allegations in the employee complaint concerning the time period of the claim, the laws violated, and all parties liable, and the amount of compensation requested, applicable interest, and administrative fees available under Section 98.1.
(d)Within 90 days of the issuance of the formal complaint described in paragraph (3) of subdivision (c), the Labor Commissioner shall set a hearing date and serve a copy of the formal complaint on all parties, along with a notice of the date, time, and place of the hearing. The Labor Commissioner may conduct the hearing in person, over the telephone, or via video conference.
(1)Within 10 days after service of the notice of the hearing and the formal complaint, a defendant may file an answer or a revised answer with the Labor Commissioner in any form as the Labor Commissioner may prescribe, setting forth the particulars in which the formal complaint is inaccurate or incomplete and the facts upon which the defendant intends to rely.
(2)No pleading other than the formal complaint and answer of the defendant or defendants shall be required. Both shall be in writing and shall conform to the form and the rules of practice and procedure adopted by the Labor Commissioner.
(3)Evidence on matters not pleaded in the answer or produced in response to a subpoena issued by the Labor Commissioner shall be allowed only on terms and conditions the Labor Commissioner shall impose. In all these cases, the claimant shall be entitled to a continuance for purposes of review of the new evidence.
(4)If a defendant fails to appear, the Labor Commissioner may issue an order, decision, or award in the amount stated in the formal complaint issued pursuant to paragraph (3) of subdivision (c). The order, decision, or award shall be issued as set forth in Section 98.1, and may be appealed under Section 98.2.
(5)If a defendants records are inaccurate or inadequate as to the precise extent of work completed and compensated by the claimant, the claimant has carried out their burden of proof if they prove that they have in fact performed work for which they were improperly compensated and produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.
(e)A hearing conducted pursuant to this chapter is governed by the division and by the rules of practice and procedure adopted by the Labor Commissioner. It is the intent of the Legislature that hearings held pursuant to this section be conducted in an informal setting preserving the rights of the parties.
(f)A defendant failing to appear or answer, or subsequently contending to be aggrieved in any manner by want of notice of the pendency of the proceedings, may apply to the Labor Commissioner for relief in accordance with Section 473 of the Code of Civil Procedure. The Labor Commissioner may afford this relief. The Labor Commissioners authority to grant relief under this subdivision terminates upon the defendants filing of an appeal under Section 98.2. Absent an appeal under Section 98.2, no right to relief, including the claim that the findings or award of the Labor Commissioner or judgment entered thereon are void upon their face, shall accrue to the defendant in any court unless prior application is made to the Labor Commissioner in accordance with this chapter.
(g)(1)Whenever a claim is filed under this chapter against a person operating or doing business under a fictitious business name, as defined in Section 17900 of the Business and Professions Code, which relates to the persons business, the division shall inquire at any point during the procedures set forth in this section whether the name of the person is the legal name under which the business or person has been licensed, registered, incorporated, or otherwise authorized to do business.
(2)The division may amend an order, decision, or award to conform to the legal name of the business or the person who is the defendant to a wage claim, if it can be shown that proper service was made on the defendant or the defendants agent, unless a judgment had been entered on the order, decision, or award pursuant to subdivision (d) of Section 98.2. The Labor Commissioner may apply to the clerk of the superior court to amend a judgment that has been issued pursuant to a final order, decision, or award to conform to the legal name of the defendant, if it can be shown that proper service was made on the defendant or the defendants agent.
(h)A party who has received actual notice of a claim before the Labor Commissioner shall, while the matter is before the Labor Commissioner, notify the Labor Commissioner in writing of any change in that partys business or personal address within 10 days after the change in address occurs.
(i)The Labor Commissioners authority to investigate a claim or issue an order, decision, or award does not terminate upon the expiration of the deadlines set forth in this section.
(j)A notice required to be given pursuant to this section shall be given by personal service, first-class mail, certified mail, registered mail, in the manner specified in Section 415.20 of the Code of Civil Procedure, or by any manner that the party agrees to accept service, including, but not limited to, electronic service.
SEC. 2.Section 98.1 of the Labor Code is amended to read:98.1.(a)Within 15 days after the hearing described in Section 98 is concluded, or upon a failure to answer or appear as described in Section 98, the Labor Commissioner shall file in the office of the division a copy of the order, decision, or award. Upon filing of the order, decision, or award, the Labor Commissioner shall serve a copy of the decision on the parties by personal service, first-class mail, certified mail, or registered mail, in the manner specified in Section 415.20 of the Code of Civil Procedure, or by any manner that a party agrees to accept service, including, but not limited to, electronic service. The notice shall also advise the parties of their right to appeal the decision or award and further advise the parties that failure to do so within the period prescribed by this chapter shall result in the decision or award becoming final and enforceable as a judgment by the superior court.
(b)For the purpose of this section, an order, decision, or award shall include any sums found owing, damages proved, interest accrued, any penalties awarded pursuant to this code, and the reasons for the decision. An order, decision, or award issued under this section shall be deemed a determination of the defendants liability for the unpaid wages specified in the order, decision, or award.
(c)All awards granted pursuant to a hearing under this chapter shall accrue interest on all due and unpaid wages at the same rate as prescribed by subdivision (b) of Section 3289 of the Civil Code. The interest shall accrue until the wages are paid from the date that the wages were due and payable as provided in Part 1 (commencing with Section 200) of Division 2.
(d)(1)An order, decision, or award granted under this chapter shall impose an administrative fee payable in the amount of 30 percent of the order, decision, or award. The administrative fee shall be deposited into the Wage Recovery Fund, which is hereby created.
(2)Upon appropriation by the Legislature for this express purpose, all money in the Wage Recovery Fund shall be disbursed by the Labor Commissioner only to persons determined by the Labor Commissioner to have been damaged by the failure to pay wages and penalties and for other damages by an employer.
(3)Any disbursement shall be made pursuant to a claim for recovery from the fund in accordance with procedures prescribed by the Labor Commissioner.
(4)Any disbursed funds subsequently recovered by the Labor Commissioner from a liable party pursuant to an assignment of the claim to the Labor Commissioner for recovery of due amounts shall be returned to the fund.
(5)Upon a request by a defendant at a hearing held pursuant to subdivision (d) of Section 98, the Labor Commissioner may waive any or all of the administrative fee, provided that all of the following are satisfied:
(A)The order, decision, or award issued under this chapter does not impose liability for penalties pursuant to Section 203.
(B)The defendant shall attest in writing that they do not have a prior order, decision, award, or judgment issued against them for engaging in illegal conduct related to a dispute over wages or other violations under the jurisdiction of the Labor Commissioner.
(C)The defendant shall attest in writing that they have not entered into a settlement agreement concerning prior illegal conduct related to a dispute over wages or other violations under the jurisdiction of the Labor Commissioner. A payment made pursuant to paragraph (4) of subdivision (a) of Section 98 does not constitute a settlement agreement for purposes of this subparagraph.
SEC. 3.Section 98.2 of the Labor Code is amended to read:98.2.(a)Within 10 days after service of notice of an order, decision, or award the parties may seek review by filing an appeal to the superior court, where the appeal shall be heard de novo. The court shall charge the first paper filing fee under Section 70611 of the Government Code to the party seeking review. The fee shall be distributed as provided in Section 68085.3 of the Government Code. A copy of the appeal request shall be served upon the Labor Commissioner by the appellant. For purposes of computing the 10-day period after service, Section 1013 of the Code of Civil Procedure is applicable. An appeal filed under this section shall be classified as an unlimited civil case.
(b)As a condition to filing an appeal pursuant to this section, each appealing defendant shall first post an undertaking with the reviewing court in the amount of the order, decision, or award. The undertaking shall consist of an appeal bond issued by a licensed surety or a cash deposit with the court in the amount of the order, decision, or award. The appealing defendant shall provide written notification to the other parties and the Labor Commissioner of the posting of the undertaking. The undertaking shall be on the condition that, if any judgment is entered in favor of the employee, the appealing defendant shall pay the amount owed pursuant to the judgment, and if the appeal is withdrawn or dismissed without entry of judgment, the appealing defendant shall pay the amount owed pursuant to the order, decision, or award of the Labor Commissioner unless the parties have executed a settlement agreement for payment of some other amount, in which case the appealing defendant shall pay the amount that the appealing defendant is obligated to pay under the terms of the settlement agreement. If the appealing defendant fails to pay the amount owed within 10 days of entry of the judgment, dismissal, or withdrawal of the appeal, or the execution of a settlement agreement, a portion of the undertaking equal to the amount owed, or the entire undertaking if the amount owed exceeds the undertaking, is forfeited to the employee.
(c)If the party seeking review by filing an appeal to the superior court is unsuccessful in the appeal, the court shall determine the costs and reasonable attorneys fees incurred by the other parties to the appeal, and assess that amount as a cost upon the party filing the appeal. A party seeking appeal is unsuccessful if they withdraw their appeal without a judgment. An employee is successful if the court awards, or a defendant voluntarily pays, an amount greater than zero.
(d)If no notice of appeal of the order, decision, or award is filed within the period set forth in subdivision (a), the order, decision, or award shall, in the absence of fraud, be deemed the final order.
(e)A court hearing an action filed under this section has jurisdiction over the entire wage dispute, including related wage claims not raised in front of the Labor Commissioner.
(f)A court shall not consolidate an action filed under this section with any other action not arising out of, or related to, the wage claim covered by underlying order, decision, or award absent an executed agreement in writing by all parties.
(g)(1)The Labor Commissioner shall file, within 10 days of the order becoming final pursuant to subdivision (d), a certified copy of the final order with the clerk of the superior court of the appropriate county unless a settlement has been reached by the parties and approved by the Labor Commissioner. Judgment shall be entered immediately by the court clerk in conformity therewith. The judgment so entered has the same force and effect as, and is subject to all of the provisions of law relating to, a judgment in a civil action, and may be enforced in the same manner as any other judgment of the court in which it is entered. Enforcement of the judgment shall receive court priority.
(2)Notwithstanding paragraph (1), a court shall grant an application filed by the Labor Commissioner to vacate a judgment deemed final under paragraph (1) upon the Labor Commissioners granting of relief under subdivision (f) of Section 98.
(f)(1)In order to ensure that judgments are satisfied, the Labor Commissioner may serve upon the judgment debtor, personally or by first-class mail at the last known address of the judgment debtor listed with the division, a form similar to, and requiring the reporting of the same information as, the form approved or adopted by the Judicial Council for purposes of subdivision (a) of Section 116.830 of the Code of Civil Procedure to assist in identifying the nature and location of any assets of the judgment debtor.
(2)The judgment debtor shall complete the form and cause it to be delivered to the division at the address listed on the form within 35 days after the form has been served on the judgment debtor, unless the judgment has been satisfied. In case of willful failure by the judgment debtor to comply with this subdivision, the division or the judgment creditor may request the court to apply the sanctions provided in Section 708.170 of the Code of Civil Procedure.
(g)(1)As an alternative to a judgment lien, upon the order becoming final pursuant to subdivision (d), a lien on real property may be created by the Labor Commissioner recording a certificate of lien, for amounts due under the final order and in favor of the employee or employees named in the order, with the county recorder of any county in which the employers real property may be located, at the Labor Commissioners discretion and depending upon information the Labor Commissioner obtains concerning the employers assets. The lien attaches to all interests in real property of the employer located in the county where the lien is created to which a judgment lien may attach pursuant to Section 697.340 of the Code of Civil Procedure.
(2)The certificate of lien shall include information as prescribed by Section 27288.1 of the Government Code.
(3)The recorder shall accept and record the certificate of lien and shall index it as prescribed by law.
(4)Upon payment of the amount due under the final order, the Labor Commissioner shall issue a certificate of release, releasing the lien created under paragraph (1). The certificate of release may be recorded by the employer at the employers expense.
(5)Unless the lien is satisfied or released, a lien under this section shall continue until 10 years from the date of its creation.
(h)Notwithstanding subdivision (e), the Labor Commissioner may stay execution of any judgment entered upon an order, decision, or award that has become final upon good cause appearing therefor and may impose the terms and conditions of the stay of execution. A certified copy of the stay of execution shall be filed with the clerk entering the judgment.
(i)When a judgment is satisfied in fact, other than by execution, the Labor Commissioner may, upon the motion of either party or on its own motion, order entry of satisfaction of judgment. The clerk of the court shall enter a satisfaction of judgment upon the filing of a certified copy of the order.
(j)The Labor Commissioner shall make every reasonable effort to ensure that judgments are satisfied, including taking all appropriate legal action and requiring the employer to deposit a bond as provided in Section 240.
(k)The judgment creditor, or the Labor Commissioner as assignee of the judgment creditor, is entitled to court costs and reasonable attorneys fees for enforcing the judgment that is rendered pursuant to this section.
(a)(1)(A)The Labor Commissioner is authorized to investigate employee complaints. The Labor Commissioner may provide for a hearing in any action to recover wages, penalties, and other demands for compensation, including liquidated damages if the employee complaint alleges payment of a wage less than the minimum wage fixed by an order of the Industrial Welfare Commission or by statute, properly before the division or the Labor Commissioner, including orders of the Industrial Welfare Commission, and shall determine all matters arising under the Labor Commissioners jurisdiction.
(B)The Labor Commissioner may also provide for a hearing to recover civil penalties due pursuant to Section 558 against any employer or other person acting on behalf of an employer, including, but not limited to, an individual liable pursuant to Section 558.1.
(C)It is within the jurisdiction of the Labor Commissioner to accept and determine claims from holders of payroll checks or payroll drafts returned unpaid because of insufficient funds, if, after a diligent search, the holder is unable to return the dishonored check or draft to the payee and recover the sums paid out.
(D)For the purpose of calculating the statute of limitations for any employee complaint investigated under this section, the action shall commence upon the filing of the employee complaint.
(2)If the Labor Commissioner determines that no further action will be taken on the employee complaint, the Labor Commissioner shall, within 30 days of the receipt of an employee complaint, notify the complainant of the determination. If the Labor Commissioner declines to continue to investigate an employee complaint, the claimant may pursue remedies through any alternative forum available with the tolling of the statute of limitations based on the date the employee complaint was made, so long as the subsequent action is commenced within one year of the date the notice was provided pursuant to this subdivision.
(2)Within(3)If the Labor Commissioner does not make a determination pursuant to paragraph (2) that no further action will be taken, the Labor Commissioner shall, within 60 days of receipt of an employee complaint, the Labor Commissioner shall notify all parties against which the employee complaint has been filed of the allegations asserted in the complaint, including the total amount of wages, penalties, and other demands for compensation alleged due. If the employee complaint did not include the complainants best estimate of wages and penalties owed, the Labor Commissioner may calculate a monetary value based on the complainants allegations and any investigation it has conducted within the time period allowed. The notice shall identify the Labor Code section under which the claimant asserts the defendants liability if it is ascertainable from the employees complaint or if it is ascertainable from other available information within the time period allowed.
(3)(4)Within 30 days of transmittal of the notice described in paragraph (2), (3), the defendants shall respond by either paying the full amount due as described in the notice or by filing an answer with the Labor Commissioner. An answer shall, at a minimum, include both of the following:
(A)Whether the defendant admits to employing the complainant during any period alleged in the notice.
(i)If the defendant denies an employment relationship based on a workers classification as an independent contractor, the defendant shall provide facts to demonstrate that the classification meets the requirements in Article 1.5 (commencing with Section 2775) of Chapter 2 of Division 3.
(ii)If the defendant denies an employment relationship for a reason other than as specified in clause (i), the defendant shall name any and all known employers of the complainant or other parties potentially liable for the violations during the claim period, and shall include their contact information.
(B)Whether the defendant admits or denies owing any amount to the complainant.
(i)For any admission of an amount owed, the Labor Commissioner may issue an order, decision, or award for that amount as set forth in Section 98.1. The order, decision, or award may be appealed under Section 98.2. The Labor Commissioner may continue to investigate any claims for which the defendant did not admit to owing.
(ii)For any denial of liability for wages, penalties, and other demands for compensation alleged, the defendants shall set forth the particulars in which the employee complaint is inaccurate or incomplete and the facts upon which the defendant intends to rely.
(4)(5)If the defendant fails to provide an answer within 30 days of transmittal of the notice described in paragraph (2), (3), the Labor Commissioner shall issue an order, decision, or award in the amount stated in the notice, as set forth in Section 98.1. The order, decision, or award may be appealed under Section 98.2. If the defendant provides an answer, but the answer does not meet the requirements of this section, the Labor Commissioner may provide the defendant with 15 additional days to submit a revised answer. After the 15 days, if the defendant fails to provide an answer within the requirements of this section, the Labor Commissioner shall issue an order, decision, or award in the amount stated in the notice described in paragraph (2), (3), as set forth in Section 98.1. The order, decision, or award may be appealed under Section 98.2.
(5)(6)The Labor Commissioner may request an answer from any new party added to the employee complaint at any point in the investigation. investigation by issuing a notice of claim to that employer within 60 days of the employer being added to the employee complaint. The notice of claim shall include the information specified in paragraph (3). The employers response to the notice of claim shall be governed by paragraphs (4) and (5).
(b)If the Labor Commissioner determines to take action in accordance with Section 98.3 or determines that no further action will be taken on the employee complaint, the Labor Commissioner shall, within 30 days of the receipt of the answer, notify all parties of the determination. If the Labor Commissioner declines to continue to investigate an employee complaint, the claimant may pursue remedies through any alternative forum available with the tolling of the statute of limitations based on the date the employee complaint was made, so long as the subsequent action is commenced within one year of the date the notice was provided pursuant to this subdivision.
(c)If the Labor Commissioner does not make a determination pursuant to subdivision (b), the Labor Commissioner shall conduct an investigation of the employee complaint. The Labor Commissioner shall make an assessment estimated appraisal of the amount of wages, damages, penalties, expenses, and other compensation owed and shall determine all the parties liable for the assessment. The investigation, assessment, and determination of liability shall be made within 90 days of the receipt of the answer described in paragraph (3) (4) of subdivision (a), and shall be made through the following process:
(1)The Labor Commissioner may decide to hold a mandatory investigatory and settlement conference upon providing notice of the conference to the parties. If the claimant fails to attend the conference, the employee complaint may be dismissed unless a claimant can provide a good cause reason for their nonappearance. If the defendant fails to attend the settlement conference and does not provide a good cause reason for their nonappearance, the Labor Commissioner may issue an order, decision, or award in the amount stated in the notice provided by paragraph (2) (3) of subdivision (a). The order, decision, or award shall be issued as set forth in Section 98.1 and may be appealed under Section 98.2. Upon agreement of the claimant, the Labor Commissioner may hold additional mandatory investigatory and settlement conferences if additional defendants are identified during the investigation of the employee complaint.
(2)The Labor Commissioner may issue a subpoena pursuant to Section 92 to a defendant requesting copies of records for the employee, as described in Section 226, during the claim period. The Labor Commissioner may also issue a subpoena pursuant to Section 92 for all records required to be maintained by the relevant wage order, and to any other parties or for any other information as determined by the Labor Commissioner.
(3)The Labor Commissioner shall issue a formal complaint that includes the allegations in the employee complaint concerning the time period of the claim, the laws violated, and all parties liable, and the amount of compensation requested, applicable interest, and administrative fees available under Section 98.1, and all liable parties. 98.1.
(d)Within 90 days of the issuance of the formal complaint described in paragraph (3) of subdivision (c), the Labor Commissioner shall set a hearing date and serve a copy of the formal complaint on all parties, along with a notice of the date, time, and place of the hearing. The Labor Commissioner may conduct the hearing in person, over the telephone, or via video conference.
(1)Within 10 days after service of the notice of the hearing and the formal complaint, a defendant may file an answer or a revised answer with the Labor Commissioner in any form as the Labor Commissioner may prescribe, setting forth the particulars in which the formal complaint is inaccurate or incomplete and the facts upon which the defendant intends to rely.
(2)No pleading other than the formal complaint and answer of the defendant or defendants shall be required. Both shall be in writing and shall conform to the form and the rules of practice and procedure adopted by the Labor Commissioner.
(3)Evidence on matters not pleaded in the answer or produced in response to a subpoena issued by the Labor Commissioner shall be allowed only on terms and conditions the Labor Commissioner shall impose. In all these cases, the claimant shall be entitled to a continuance for purposes of review of the new evidence.
(4)If a defendant fails to appear, the Labor Commissioner may issue an order, decision, or award in the amount stated in the formal complaint issued pursuant to paragraph (3) of subdivision (c). The order, decision, or award shall be issued as set forth in Section 98.1, and may be appealed under Section 98.2.
(5)If a defendants records are inaccurate or inadequate as to the precise extent of work completed and compensated by the claimant, the claimant has carried out their burden of proof if they prove that they have in fact performed work for which they were improperly compensated and produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.
(e)A hearing conducted pursuant to this chapter is governed by the division and by the rules of practice and procedure adopted by the Labor Commissioner. It is the intent of the Legislature that hearings held pursuant to this section be conducted in an informal setting preserving the rights of the parties.
(f)A defendant failing to appear or answer, or subsequently contending to be aggrieved in any manner by want of notice of the pendency of the proceedings, may apply to the Labor Commissioner for relief in accordance with Section 473 of the Code of Civil Procedure. The Labor Commissioner may afford this relief. The Labor Commissioners authority to grant relief under this subdivision terminates upon the defendants filing of an appeal under Section 98.2. Absent an appeal under Section 98.2, no right to relief, including the claim that the findings or award of the Labor Commissioner or judgment entered thereon are void upon their face, shall accrue to the defendant in any court unless prior application is made to the Labor Commissioner in accordance with this chapter.
(g)(1)Whenever a claim is filed under this chapter against a person operating or doing business under a fictitious business name, as defined in Section 17900 of the Business and Professions Code, which relates to the persons business, the division shall inquire at any point during the procedures set forth in this section whether the name of the person is the legal name under which the business or person has been licensed, registered, incorporated, or otherwise authorized to do business.
(2)The division may amend an order, decision, or award to conform to the legal name of the business or the person who is the defendant to a wage claim, if it can be shown that proper service was made on the defendant or the defendants agent, unless a judgment had been entered on the order, decision, or award pursuant to subdivision (d) of Section 98.2. The Labor Commissioner may apply to the clerk of the superior court to amend a judgment that has been issued pursuant to a final order, decision, or award to conform to the legal name of the defendant, if it can be shown that proper service was made on the defendant or the defendants agent.
(h)A party who has received actual notice of a claim before the Labor Commissioner shall, while the matter is before the Labor Commissioner, notify the Labor Commissioner in writing of any change in that partys business or personal address within 10 days after the change in address occurs.
(i)The Labor Commissioners authority to investigate a claim or issue an order, decision, or award does not terminate upon the expiration of the deadlines set forth in this section.
(j)A notice required to be given pursuant to this section shall be given by personal service, first-class mail, certified mail, registered mail, in the manner specified in Section 415.20 of the Code of Civil Procedure, or by any manner that the party agrees to accept service, including, but not limited to, electronic service.
SEC. 2.Section 98.1 of the Labor Code is amended to read:98.1.(a)Within 15 days after the hearing described in Section 98 is concluded, or upon a failure to answer or appear as described in Section 98, the Labor Commissioner shall file in the office of the division a copy of the order, decision, or award. Upon filing of the order, decision, or award, the Labor Commissioner shall serve a copy of the decision on the parties by personal service, first-class mail, certified mail, registered mail, in the manner specified in Section 415.20 of the Code of Civil Procedure, or by any manner that a party agrees to accept service, including, but not limited to, electronic service. The notice shall also advise the parties of their right to appeal the decision or award and further advise the parties that failure to do so within the period prescribed by this chapter shall result in the decision or award becoming final and enforceable as a judgment by the superior court.
(b)For the purpose of this section, an order, decision, or award shall include any sums found owing, damages proved, interest accrued, any penalties awarded pursuant to this code, and the reasons for the decision. An order, decision, or award issued under this section shall be deemed a determination of the defendants liability for the unpaid wages specified in the order, decision, or award.
(c)All awards granted pursuant to a hearing under this chapter shall accrue interest on all due and unpaid wages at the same rate as prescribed by subdivision (b) of Section 3289 of the Civil Code. The interest shall accrue until the wages are paid from the date that the wages were due and payable as provided in Part 1 (commencing with Section 200) of Division 2.
(d)(1)A An award granted under this chapter shall impose an administrative fee payable in the amount of 30 percent of the order, decision, or award. The administrative fee shall be deposited into the Wage Recovery Fund, which is hereby created.
(2)Upon appropriation by the Legislature for this express purpose, all money in the Wage Recovery Fund shall be available to the Labor Commissioner to compensate the Labor Commissioner for the staffing required to investigate and recover wages and penalties owed to aggrieved employees. disbursed by the Labor Commissioner only to persons determined by the Labor Commissioner to have been damaged by the failure to pay wages and penalties and for other damages by an employer.
(3)Any disbursement shall be made pursuant to a claim for recovery from the fund in accordance with procedures prescribed by the Labor Commissioner.
(4)Any disbursed funds subsequently recovered by the Labor Commissioner from a liable party pursuant to an assignment of the claim to the Labor Commissioner for recovery of due amounts shall be returned to the fund.
SEC. 3.Section 98.2 of the Labor Code is amended to read:98.2.(a)Within 10 days after service of notice of an order, decision, or award the parties may seek review by filing an appeal to the superior court, where the appeal shall be heard de novo. The court shall charge the first paper filing fee under Section 70611 of the Government Code to the party seeking review. The fee shall be distributed as provided in Section 68085.3 of the Government Code. A copy of the appeal request shall be served upon the Labor Commissioner by the appellant. For purposes of computing the 10-day period after service, Section 1013 of the Code of Civil Procedure is applicable. An appeal filed under this section shall be classified as an unlimited civil case.
(b)As a condition to filing an appeal pursuant to this section, each appealing defendant shall first post an undertaking with the reviewing court in the amount of the order, decision, or award. The undertaking shall consist of an appeal bond issued by a licensed surety or a cash deposit with the court in the amount of the order, decision, or award. The appealing defendant shall provide written notification to the other parties and the Labor Commissioner of the posting of the undertaking. The undertaking shall be on the condition that, if any judgment is entered in favor of the employee, the appealing defendant shall pay the amount owed pursuant to the judgment, and if the appeal is withdrawn or dismissed without entry of judgment, the appealing defendant shall pay the amount owed pursuant to the order, decision, or award of the Labor Commissioner unless the parties have executed a settlement agreement for payment of some other amount, in which case the appealing defendant shall pay the amount that the appealing defendant is obligated to pay under the terms of the settlement agreement. If the appealing defendant fails to pay the amount owed within 10 days of entry of the judgment, dismissal, or withdrawal of the appeal, or the execution of a settlement agreement, a portion of the undertaking equal to the amount owed, or the entire undertaking if the amount owed exceeds the undertaking, is forfeited to the employee.
(c)If the party seeking review by filing an appeal to the superior court is unsuccessful in the appeal, the court shall determine the costs and reasonable attorneys fees incurred by the other parties to the appeal, and assess that amount as a cost upon the party filing the appeal. A party seeking appeal is unsuccessful if they withdraw their appeal without a judgment. An employee is successful if the court awards, or a defendant voluntarily pays, an amount greater than zero.
(d)If no notice of appeal of the order, decision, or award is filed within the period set forth in subdivision (a), the order, decision, or award shall, in the absence of fraud, be deemed the final order.
(e)A court hearing an action filed under this section has jurisdiction over the entire wage dispute, including related wage claims not raised in front of the Labor Commissioner.
(f)A court shall not consolidate an action filed under this section with any other action not arising out of, or related to, the wage claim covered by underlying order, decision, or award absent an executed agreement in writing by all parties.
(g)(1)The Labor Commissioner shall file, within 10 days of the order becoming final pursuant to subdivision (d), a certified copy of the final order with the clerk of the superior court of the appropriate county unless a settlement has been reached by the parties and approved by the Labor Commissioner. Judgment shall be entered immediately by the court clerk in conformity therewith. The judgment so entered has the same force and effect as, and is subject to all of the provisions of law relating to, a judgment in a civil action, and may be enforced in the same manner as any other judgment of the court in which it is entered. Enforcement of the judgment shall receive court priority.
(2)Notwithstanding paragraph (1), a court shall grant an application filed by the Labor Commissioner to vacate a judgment deemed final under paragraph (1) upon the Labor Commissioners granting of relief under subdivision (f) of Section 98.
(f)(1)In order to ensure that judgments are satisfied, the Labor Commissioner may serve upon the judgment debtor, personally or by first-class mail at the last known address of the judgment debtor listed with the division, a form similar to, and requiring the reporting of the same information as, the form approved or adopted by the Judicial Council for purposes of subdivision (a) of Section 116.830 of the Code of Civil Procedure to assist in identifying the nature and location of any assets of the judgment debtor.
(2)The judgment debtor shall complete the form and cause it to be delivered to the division at the address listed on the form within 35 days after the form has been served on the judgment debtor, unless the judgment has been satisfied. In case of willful failure by the judgment debtor to comply with this subdivision, the division or the judgment creditor may request the court to apply the sanctions provided in Section 708.170 of the Code of Civil Procedure.
(g)(1)As an alternative to a judgment lien, upon the order becoming final pursuant to subdivision (d), a lien on real property may be created by the Labor Commissioner recording a certificate of lien, for amounts due under the final order and in favor of the employee or employees named in the order, with the county recorder of any county in which the employers real property may be located, at the Labor Commissioners discretion and depending upon information the Labor Commissioner obtains concerning the employers assets. The lien attaches to all interests in real property of the employer located in the county where the lien is created to which a judgment lien may attach pursuant to Section 697.340 of the Code of Civil Procedure.
(2)The certificate of lien shall include information as prescribed by Section 27288.1 of the Government Code.
(3)The recorder shall accept and record the certificate of lien and shall index it as prescribed by law.
(4)Upon payment of the amount due under the final order, the Labor Commissioner shall issue a certificate of release, releasing the lien created under paragraph (1). The certificate of release may be recorded by the employer at the employers expense.
(5)Unless the lien is satisfied or released, a lien under this section shall continue until 10 years from the date of its creation.
(h)Notwithstanding subdivision (e), the Labor Commissioner may stay execution of any judgment entered upon an order, decision, or award that has become final upon good cause appearing therefor and may impose the terms and conditions of the stay of execution. A certified copy of the stay of execution shall be filed with the clerk entering the judgment.
(i)When a judgment is satisfied in fact, other than by execution, the Labor Commissioner may, upon the motion of either party or on its own motion, order entry of satisfaction of judgment. The clerk of the court shall enter a satisfaction of judgment upon the filing of a certified copy of the order.
(j)The Labor Commissioner shall make every reasonable effort to ensure that judgments are satisfied, including taking all appropriate legal action and requiring the employer to deposit a bond as provided in Section 240.
(k)The judgment creditor, or the Labor Commissioner as assignee of the judgment creditor, is entitled to court costs and reasonable attorneys fees for enforcing the judgment that is rendered pursuant to this section.
(a)(1)(A)The Labor Commissioner is authorized to investigate employee complaints. The Labor Commissioner may provide for a hearing in any action to recover wages, penalties, and other demands for compensation, including liquidated damages if the employee complaint alleges payment of a wage less than the minimum wage fixed by an order of the Industrial Welfare Commission or by statute, properly before the division or the Labor Commissioner, including orders of the Industrial Welfare Commission, and shall determine all matters arising under his or her the Labor Commissioners jurisdiction. The
(B)The Labor Commissioner may also provide for a hearing to recover civil penalties due pursuant to Section 558 against any employer or other person acting on behalf of an employer, including, but not limited to, an individual liable pursuant to Section 558.1. It
(C)It is within the jurisdiction of the Labor Commissioner to accept and determine claims from holders of payroll checks or payroll drafts returned unpaid because of insufficient funds, if, after a diligent search, the holder is unable to return the dishonored check or draft to the payee and recover the sums paid out. Within 30 days of the filing of the complaint, the Labor Commissioner shall notify the parties as to whether a hearing will be held, whether action will be taken in accordance with Section 98.3, or whether no further action will be taken on the complaint. If the determination is made by the Labor Commissioner to hold a hearing, the hearing shall be held within 90 days of the date of that determination. However, the Labor Commissioner may postpone or grant additional time before setting a hearing if the Labor Commissioner finds that it would lead to an equitable and just resolution of the dispute. A party who has received actual notice of a claim before the Labor Commissioner shall, while the matter is before the Labor Commissioner, notify the Labor Commissioner in writing of any change in that partys business or personal address within 10 days after the change in address occurs.
It is the intent of the Legislature that hearings held pursuant to this section be conducted in an informal setting preserving the rights of the parties.(b)When a hearing is set, a copy of the complaint, which shall include the amount of compensation requested, together with a notice of time and place of the hearing, shall be served on all parties, personally or by certified mail, or in the manner specified in Section 415.20 of the Code of Civil Procedure.(D)For the purpose of calculating the statute of limitations for any employee complaint investigated under this section, the action shall commence upon the filing of the employee complaint.
(2)Within 60 days of receipt of an employee complaint, the Labor Commissioner shall notify all parties against which the employee complaint has been filed of the allegations asserted in the complaint, including the total amount of wages, penalties, and other demands for compensation alleged due. If the employee complaint did not include the complainants best estimate of wages and penalties owed, the Labor Commissioner may calculate a monetary value based on the complainants allegations and any investigation it has conducted within the time period allowed.
(3)Within 30 days of transmittal of the notice described in paragraph (2), the defendants shall respond by either paying the full amount due as described in the notice or by filing an answer with the Labor Commissioner. An answer shall, at a minimum, include both of the following:
(A)Whether the defendant admits to employing the complainant during any period alleged in the notice.
(i)If the defendant denies an employment relationship based on a workers classification as an independent contractor, the defendant shall provide facts to demonstrate that the classification meets the requirements in Article 1.5 (commencing with Section 2775) of Chapter 2 of Division 3.
(ii)If the defendant denies an employment relationship for a reason other than as specified in clause (i), the defendant shall name any and all known employers of the complainant or other parties potentially liable for the violations during the claim period, and shall include their contact information.
(B)Whether the defendant admits or denies owing any amount to the complainant.
(i)For any admission of an amount owed, the Labor Commissioner may issue an order, decision, or award for that amount as set forth in Section 98.1. The order, decision, or award may be appealed under Section 98.2. The Labor Commissioner may continue to investigate any claims for which the defendant did not admit to owing.
(ii)For any denial of liability for wages, penalties, and other demands for compensation alleged, the defendants shall set forth the particulars in which the employee complaint is inaccurate or incomplete and the facts upon which the defendant intends to rely.
(4)If the defendant fails to provide an answer within 30 days of transmittal of the notice described in paragraph (2), the Labor Commissioner shall issue an order, decision, or award in the amount stated in the notice, as set forth in Section 98.1. The order, decision, or award may be appealed under Section 98.2. If the defendant provides an answer, but the answer does not meet the requirements of this section, the Labor Commissioner may provide the defendant with 15 additional days to submit a revised answer. After the 15 days, if the defendant fails to provide an answer within the requirements of this section, the Labor Commissioner shall issue an order, decision, or award in the amount stated in the notice described in paragraph (2), as set forth in Section 98.1. The order, decision, or award may be appealed under Section 98.2.
(5)The Labor Commissioner may request an answer from any new party added to the employee complaint at any point in the investigation.
(b)If the Labor Commissioner determines to take action in accordance with Section 98.3 or determines that no further action will be taken on the employee complaint, the Labor Commissioner shall, within 30 days of the receipt of the answer, notify all parties of the determination. If the Labor Commissioner declines to continue to investigate an employee complaint, the claimant may pursue remedies through any alternative forum available with the tolling of the statute of limitations based on the date the employee complaint was made, so long as the subsequent action is commenced within one year of the date the notice was provided pursuant to this subdivision.
(c)If the Labor Commissioner does not make a determination pursuant to subdivision (b), the Labor Commissioner shall conduct an investigation of the employee complaint. The Labor Commissioner shall make an assessment of the amount of wages, damages, penalties, expenses, and other compensation owed and shall determine all the parties liable for the assessment. The investigation, assessment, and determination of liability shall be made within 90 days of the receipt of the answer described in paragraph (3) of subdivision (a), and shall be made through the following process:
(1)The Labor Commissioner may decide to hold a mandatory investigatory and settlement conference upon providing notice of the conference to the parties. If the claimant fails to attend the conference, the employee complaint may be dismissed unless a claimant can provide a good cause reason for their nonappearance. If the defendant fails to attend the settlement conference and does not provide a good cause reason for their nonappearance, the Labor Commissioner may issue an order, decision, or award in the amount stated in the notice provided by paragraph (2) of subdivision (a). The order, decision, or award shall be issued as set forth in Section 98.1 and may be appealed under Section 98.2. Upon agreement of the claimant, the Labor Commissioner may hold additional mandatory investigatory and settlement conferences if additional defendants are identified during the investigation of the employee complaint.
(2)The Labor Commissioner may issue a subpoena pursuant to Section 92 to a defendant requesting copies of records for the employee, as described in Section 226, during the claim period. The Labor Commissioner may also issue a subpoena pursuant to Section 92 for all records required to be maintained by the relevant wage order, and to any other parties or for any other information as determined by the Labor Commissioner.
(3)The Labor Commissioner shall issue a formal complaint that includes the time period of the claim, the laws violated, the amount of compensation requested, applicable interest, and administrative fees available under Section 98.1, and all liable parties.
(d)Within 90 days of the issuance of the formal complaint described in paragraph (3) of subdivision (c), the Labor Commissioner shall set a hearing date and serve a copy of the formal complaint on all parties, along with a notice of the date, time, and place of the hearing.
(c)(1)Within 10 days after service of the notice of the hearing and the formal complaint, a defendant may file an answer or a revised answer with the Labor Commissioner in any form as the Labor Commissioner may prescribe, setting forth the particulars in which the formal complaint is inaccurate or incomplete and the facts upon which the defendant intends to rely.
(d)(2)No pleading other than the formal complaint and answer of the defendant or defendants shall be required. Both shall be in writing and shall conform to the form and the rules of practice and procedure adopted by the Labor Commissioner.
(e)(3)Evidence on matters not pleaded in the answer or produced in response to a subpoena issued by the Labor Commissioner shall be allowed only on terms and conditions the Labor Commissioner shall impose. In all these cases, the claimant shall be entitled to a continuance for purposes of review of the new evidence.
(f)(4)If the a defendant fails to appear or answer within the time allowed under this chapter, no default shall be taken against him or her, but appear, the Labor Commissioner shall hear the evidence offered and shall may issue an order, decision, or award in accordance with the evidence. A in the amount stated in the formal complaint issued pursuant to paragraph (3) of subdivision (c). The order, decision, or award shall be issued as set forth in Section 98.1, and may be appealed under Section 98.2.
(e)A hearing conducted pursuant to this chapter is governed by the division and by the rules of practice and procedure adopted by the Labor Commissioner. It is the intent of the Legislature that hearings held pursuant to this section be conducted in an informal setting preserving the rights of the parties.
(f)A defendant failing to appear or answer, or subsequently contending to be aggrieved in any manner by want of notice of the pendency of the proceedings, may apply to the Labor Commissioner for relief in accordance with Section 473 of the Code of Civil Procedure. The Labor Commissioner may afford this relief. No The Labor Commissioners authority to grant relief under this subdivision terminates upon the defendants filing of an appeal under Section 98.2. Absent an appeal under Section 98.2, no right to relief, including the claim that the findings or award of the Labor Commissioner or judgment entered thereon are void upon their face, shall accrue to the defendant in any court unless prior application is made to the Labor Commissioner in accordance with this chapter.
(g)All hearings conducted pursuant to this chapter are governed by the division and by the rules of practice and procedure adopted by the Labor Commissioner.(h)(g)(1)Whenever a claim is filed under this chapter against a person operating or doing business under a fictitious business name, as defined in Section 17900 of the Business and Professions Code, which relates to the persons business, the division shall inquire at the time of the hearing any point during the procedures set forth in this section whether the name of the person is the legal name under which the business or person has been licensed, registered, incorporated, or otherwise authorized to do business.
(2)The division may amend an order, decision, or award to conform to the legal name of the business or the person who is the defendant to a wage claim, if it can be shown that proper service was made on the defendant or his or her the defendants agent, unless a judgment had been entered on the order, decision, or award pursuant to subdivision (d) of Section 98.2. The Labor Commissioner may apply to the clerk of the superior court to amend a judgment that has been issued pursuant to a final order, decision, or award to conform to the legal name of the defendant, if it can be shown that proper service was made on the defendant or his or her the defendants agent.
(h)A party who has received actual notice of a claim before the Labor Commissioner shall, while the matter is before the Labor Commissioner, notify the Labor Commissioner in writing of any change in that partys business or personal address within 10 days after the change in address occurs.
(i)The Labor Commissioners authority to investigate a claim or issue an order, decision, or award does not terminate upon the expiration of the deadlines set forth in this section.
(j)A notice required to be given pursuant to this section shall be given by personal service, first-class mail, certified mail, registered mail, in the manner specified in Section 415.20 of the Code of Civil Procedure, or by any manner that the party agrees to accept service, including, but not limited to, electronic service.
SEC. 2.Section 98.1 of the Labor Code is amended to read:98.1.(a)Within 15 days after the hearing described in Section 98 is concluded, or upon a failure to answer or appear as described in Section 98, the Labor Commissioner shall file in the office of the division a copy of the order, decision, or award. The order, decision, or award shall include a summary of the hearing and the reasons for the decision. Upon filing of the order, decision, or award, the Labor Commissioner shall serve a copy of the decision personally, by first-class mail, or in the manner specified in Section 415.20 of the Code of Civil Procedure on the parties. on the parties by personal service, first-class mail, certified mail, registered mail, in the manner specified in Section 415.20 of the Code of Civil Procedure, or by any manner that a party agrees to accept service, including, but not limited to, electronic service. The notice shall also advise the parties of their right to appeal the decision or award and further advise the parties that failure to do so within the period prescribed by this chapter shall result in the decision or award becoming final and enforceable as a judgment by the superior court.
(b)For the purpose of this section, an order, decision, or award shall include any sums found owing, damages proved, and interest accrued, any penalties awarded pursuant to this code. code, and the reasons for the decision.
(c)All awards granted pursuant to a hearing under this chapter shall accrue interest on all due and unpaid wages at the same rate as prescribed by subdivision (b) of Section 3289 of the Civil Code. The interest shall accrue until the wages are paid from the date that the wages were due and payable as provided in Part 1 (commencing with Section 200) of Division 2.
(d)(1)A award granted under this chapter shall impose an administrative fee payable in the amount of 30 percent of the order, decision, or award. The administrative fee shall be deposited into the Wage Recovery Fund, which is hereby created.
(2)Upon appropriation by the Legislature for this express purpose, all money in the Wage Recovery Fund shall be available to the Labor Commissioner to compensate the Labor Commissioner for the staffing required to investigate and recover wages and penalties owed to aggrieved employees.
SEC. 3.Section 98.2 of the Labor Code is amended to read:98.2.(a)Within 10 days after service of notice of an order, decision, or award the parties may seek review by filing an appeal to the superior court, where the appeal shall be heard de novo. The court shall charge the first paper filing fee under Section 70611 of the Government Code to the party seeking review. The fee shall be distributed as provided in Section 68085.3 of the Government Code. A copy of the appeal request shall be served upon the Labor Commissioner by the appellant. For purposes of computing the 10-day period after service, Section 1013 of the Code of Civil Procedure is applicable. An appeal filed under this section shall be classified as an unlimited civil case.
(b)As a condition to filing an appeal pursuant to this section, an employer each appealing defendant shall first post an undertaking with the reviewing court in the amount of the order, decision, or award. The undertaking shall consist of an appeal bond issued by a licensed surety or a cash deposit with the court in the amount of the order, decision, or award. The employer appealing defendant shall provide written notification to the other parties and the Labor Commissioner of the posting of the undertaking. The undertaking shall be on the condition that, if any judgment is entered in favor of the employee, the employer appealing defendant shall pay the amount owed pursuant to the judgment, and if the appeal is withdrawn or dismissed without entry of judgment, the employer appealing defendant shall pay the amount owed pursuant to the order, decision, or award of the Labor Commissioner unless the parties have executed a settlement agreement for payment of some other amount, in which case the employer appealing defendant shall pay the amount that the employer appealing defendant is obligated to pay under the terms of the settlement agreement. If the employer appealing defendant fails to pay the amount owed within 10 days of entry of the judgment, dismissal, or withdrawal of the appeal, or the execution of a settlement agreement, a portion of the undertaking equal to the amount owed, or the entire undertaking if the amount owed exceeds the undertaking, is forfeited to the employee.
(c)If the party seeking review by filing an appeal to the superior court is unsuccessful in the appeal, the court shall determine the costs and reasonable attorneys fees incurred by the other parties to the appeal, and assess that amount as a cost upon the party filing the appeal. A party seeking appeal is unsuccessful if they withdraw their appeal without a judgment. An employee is successful if the court awards awards, or a defendant voluntarily pays, an amount greater than zero.
(d)If no notice of appeal of the order, decision, or award is filed within the period set forth in subdivision (a), the order, decision, or award shall, in the absence of fraud, be deemed the final order.
(e)A court hearing an action filed under this section has jurisdiction over the entire wage dispute, including related wage claims not raised in front of the Labor Commissioner.
(f)A court shall not consolidate an action filed under this section with any other action not arising out of, or related to, the wage claim covered by underlying order, decision, or award absent an executed agreement in writing by all parties.
(e)(g)(1)The Labor Commissioner shall file, within 10 days of the order becoming final pursuant to subdivision (d), a certified copy of the final order with the clerk of the superior court of the appropriate county unless a settlement has been reached by the parties and approved by the Labor Commissioner. Judgment shall be entered immediately by the court clerk in conformity therewith. The judgment so entered has the same force and effect as, and is subject to all of the provisions of law relating to, a judgment in a civil action, and may be enforced in the same manner as any other judgment of the court in which it is entered. Enforcement of the judgment shall receive court priority.
(2)Notwithstanding paragraph (1), a court shall grant an application filed by the Labor Commissioner to vacate a judgment deemed final under paragraph (1) upon the Labor Commissioners granting of relief under subdivision (f) of Section 98.
(f)(1)In order to ensure that judgments are satisfied, the Labor Commissioner may serve upon the judgment debtor, personally or by first-class mail at the last known address of the judgment debtor listed with the division, a form similar to, and requiring the reporting of the same information as, the form approved or adopted by the Judicial Council for purposes of subdivision (a) of Section 116.830 of the Code of Civil Procedure to assist in identifying the nature and location of any assets of the judgment debtor.
(2)The judgment debtor shall complete the form and cause it to be delivered to the division at the address listed on the form within 35 days after the form has been served on the judgment debtor, unless the judgment has been satisfied. In case of willful failure by the judgment debtor to comply with this subdivision, the division or the judgment creditor may request the court to apply the sanctions provided in Section 708.170 of the Code of Civil Procedure.
(g)(1)As an alternative to a judgment lien, upon the order becoming final pursuant to subdivision (d), a lien on real property may be created by the Labor Commissioner recording a certificate of lien, for amounts due under the final order and in favor of the employee or employees named in the order, with the county recorder of any county in which the employers real property may be located, at the Labor Commissioners discretion and depending upon information the Labor Commissioner obtains concerning the employers assets. The lien attaches to all interests in real property of the employer located in the county where the lien is created to which a judgment lien may attach pursuant to Section 697.340 of the Code of Civil Procedure.
(2)The certificate of lien shall include information as prescribed by Section 27288.1 of the Government Code.
(3)The recorder shall accept and record the certificate of lien and shall index it as prescribed by law.
(4)Upon payment of the amount due under the final order, the Labor Commissioner shall issue a certificate of release, releasing the lien created under paragraph (1). The certificate of release may be recorded by the employer at the employers expense.
(5)Unless the lien is satisfied or released, a lien under this section shall continue until 10 years from the date of its creation.
(h)Notwithstanding subdivision (e), the Labor Commissioner may stay execution of any judgment entered upon an order, decision, or award that has become final upon good cause appearing therefor and may impose the terms and conditions of the stay of execution. A certified copy of the stay of execution shall be filed with the clerk entering the judgment.
(i)When a judgment is satisfied in fact, other than by execution, the Labor Commissioner may, upon the motion of either party or on its own motion, order entry of satisfaction of judgment. The clerk of the court shall enter a satisfaction of judgment upon the filing of a certified copy of the order.
(j)The Labor Commissioner shall make every reasonable effort to ensure that judgments are satisfied, including taking all appropriate legal action and requiring the employer to deposit a bond as provided in Section 240.
(k)The judgment creditor, or the Labor Commissioner as assignee of the judgment creditor, is entitled to court costs and reasonable attorneys fees for enforcing the judgment that is rendered pursuant to this section.
REVISIONS: HeadingLine 2.|
Date
|
Status
|
|---|---|
| Sep 3, 2025 | Ordered to inactive file at the request of Senator Smallwood-Cuevas. |
| Aug 29, 2025 | Read second time. Ordered to third reading. |
| Aug 29, 2025 | From committee: Do pass. (Ayes 5. Noes 2.) (August 29). |
| Aug 18, 2025 | In committee: Referred to suspense file. |
| Jul 17, 2025 | Read second time and amended. Re-referred to Com. on APPR. |
| Jul 16, 2025 | From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 11. Noes 2.) (July 15). |
| Jun 25, 2025 | From committee: Do pass and re-refer to Com. on JUD. (Ayes 4. Noes 1.) (June 25). Re-referred to Com. on JUD. |
| Jun 18, 2025 | Referred to Coms. on L., P.E. & R. and JUD. |
| Jun 18, 2025 | From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on L., P.E. & R. |
| Jun 5, 2025 | In Senate. Read first time. To Com. on RLS. for assignment. |
| Jun 4, 2025 | Read third time. Passed. Ordered to the Senate. (Ayes 50. Noes 14. Page 2060.) |
| May 27, 2025 | Read second time. Ordered to third reading. |
| May 23, 2025 | Read second time and amended. Ordered returned to second reading. |
| May 23, 2025 | From committee: Amend, and do pass as amended. (Ayes 11. Noes 1.) (May 23). |
| May 23, 2025 | Assembly Rule 63 suspended. (Ayes 51. Noes 16. Page 1644.) |
| May 7, 2025 | In committee: Set, first hearing. Referred to APPR. suspense file. |
| Apr 24, 2025 | Re-referred to Com. on APPR. |
| Apr 23, 2025 | Read second time and amended. |
| Apr 22, 2025 | From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 8. Noes 2.) (April 22). |
| Apr 3, 2025 | From committee: Do pass and re-refer to Com. on JUD. (Ayes 4. Noes 0.) (April 2). Re-referred to Com. on JUD. |
| Mar 24, 2025 | Coauthors revised. |
| Mar 13, 2025 | Referred to Coms. on L. & E. and JUD. |
| Feb 24, 2025 | Read first time. |
| Feb 22, 2025 | From printer. May be heard in committee March 24. |
| Feb 21, 2025 | Introduced. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Aug 29, 2025 | Do pass | Senate Standing Committee on Appropriations |
Passed |
|
| Aug 18, 2025 | Placed on suspense file | Senate Standing Committee on Appropriations |
Passed |
|
| Jul 15, 2025 | Do pass as amended, but first amend, and re-refer to the Committee on [Appropriations] | Senate Standing Committee on Judiciary |
Passed |
|
| Jun 25, 2025 | Do pass, but first be re-referred to the Committee on [Judiciary] | Senate Standing Committee on Labor, Public Employment and Retirement |
Passed |
|
| Jun 4, 2025 | AB 1234 Ortega Assembly Third Reading | Assembly Floor |
Passed |
|
| May 23, 2025 | Do pass as amended. | Assembly Standing Committee on Appropriations |
Passed |
|
| Apr 22, 2025 | Do pass as amended and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Judiciary |
Passed |
|
| Apr 2, 2025 | Do pass and be re-referred to the Committee on [Judiciary] | Assembly Standing Committee on Labor and Employment |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| Acclamation Insurance Management Services | ** Against | |
| Agricultural Council Of California | ** Against | |
| Allied Managed Care | ** Against | |
| American Federation Of State, County And Municipal Employees, Afl-Cio | ** Support | |
| American Subcontractors Association Of California | ** Against | |
| Anaheim Chamber Of Commerce | ** Against | |
| Asian Law Caucus | ** Support | |
| Associated General Contractors - San Diego Chapter | ** Against | |
| Associated General Contractors Of California | ** Against | |
| Association | ** Against | |
| Attorney General Rob Bonta | ** Support | |
| Bet Tzedek (Co-source) | ** Support | |
| Brea Chamber of Commerce | ** Against | |
| California Alliance of Family Owned Businesses | ** Against | |
| California Apartment Association | ** Against | |
| California Association of Sheet Metal & Air Conditioning Contractors National | ** Against | |
| California Chamber Of Commerce | ** Against | |
| California Coalition For Worker Power | ** Support | |
| California Domestic Workers Coalition | ** Support | |
| California Employment Lawyers Association | ** Support | |
| California Farm Bureau | ** Against | |
| California Farmworker Coalition | ** Support | |
| California Federation of Labor Unions, AFL-CIO (Co-source) | ** Support | |
| California Federation of Teachers, AFT, AFL-CIO | ** Support | |
| California Hotel & Lodging Association | ** Against | |
| California Immigrant Policy Center | ** Support | |
| California Landscape Contractors Association | ** Against | |
| California League of Food Producers | ** Against | |
| California League of United Latin American Citizens | ** Support | |
| California Manufacturers & Technology Association | ** Against | |
| California Nurses Association | ** Support | |
| California Retailers Association | ** Against | |
| California Rural Legal Assistance Foundation | ** Support | |
| California Safety and Legislative Board of Smart – Transportation Division | ** Support | |
| California State Association Of Electrical Workers | ** Support | |
| California State Council of The Society for Human Resource Management | ** Against | |
| California State Pipe Trades Council | ** Support | |
| California Trucking Association | ** Against | |
| Carlsbad Chamber of Commerce | ** Against | |
| Center for Workers’ Rights (Co-source) | ** Support | |
| Central California Environmental Justice Network | ** Support | |
| Central Coast Alliance United for a Sustainable Economy | ** Support | |
| Centro Binacional de Desarrollo Indigena Oaxaqueño | ** Support | |
| Centro Legal de la Raza | ** Support | |
| Chinese Progressive Association | ** Support | |
| Chino Valley Chamber of Commerce | ** Against | |
| CLEAN Carwash Worker Center | ** Support | |
| Coalition of Small and Disabled Veteran Businesses | ** Against | |
| Colusa County Chamber of Commerce | ** Against | |
| Community Legal Services in East Palo Alto | ** Support | |
| Corona Chamber of Commerce | ** Against | |
| El Dorado County Chamber of Commerce | ** Against | |
| El Dorado Hills Chamber of Commerce | ** Against | |
| Elk Grove Chamber Of Commerce | ** Against | |
| Employee Rights Center | ** Support | |
| Equal Rights Advocates | ** Support | |
| Filipino Community Center | ** Support | |
| Flasher Barricade Association | ** Against | |
| Folsom Chamber Of Commerce | ** Against | |
| Garment Worker Center | ** Support | |
| Gateway Chambers Alliance | ** Against | |
| Glendora Chamber of Commerce | ** Against | |
| Greater Coachella Valley Chamber of Commerce | ** Against | |
| Greater High Desert Chamber of Commerce | ** Against | |
| Housing Contractors Of California | ** Against | |
| Inland Empire Labor Council, AFL-CIO | ** Support | |
| Instituto de Educacion Popular del Sur de California | ** Support | |
| LA Canada Flintridge Chamber of Commerce | ** Against | |
| Lake Elsinore Valley Chamber of Commerce | ** Against | |
| lincoln area chamber of commerce | ** Against | |
| Long Beach Area Chamber of Commerce | ** Against | |
| Los Angeles Alliance for a New Economy | ** Support | |
| Maintenance Cooperation Trust Fund | ** Support | |
| Mission Action | ** Support | |
| Mixteco/Indigena Community Organizing Project | ** Support | |
| Murrieta/Wildomar Chamber of Commerce | ** Against | |
| National Federation Of Independent Business | ** Against | |
| Newport Beach Chamber of Commerce | ** Against | |
| North Valley Labor Federation | ** Support | |
| Norwalk Chamber Of Commerce | ** Against | |
| Oceanside Chamber of Commerce | ** Against | |
| Orange County Business Council | ** Against | |
| Palos Verdes Peninsula Chamber Of Commerce | ** Against | |
| Paso Robles and Templeton Chamber of Commerce | ** Against | |
| pilipino workers center | ** Support | |
| Public Counsel | ** Support | |
| Rancho Cucamonga Chamber of Commerce | ** Against | |
| Rancho Mirage Chamber of Commerce | ** Against | |
| Roseville Area Chamber Of Commerce | ** Against | |
| Santa Clara County Wage Theft Coalition | ** Support | |
| Santa Clarita Valley Chamber of Commerce | ** Against | |
| Shingle Springs/cameron Park Chamber of Commerce | ** Against | |
| Simi Valley Chamber of Commerce | ** Against | |
| Society for Human Resources Management California | ** Against | |
| south of market community action network | ** Support | |
| Southwest California Legislative Council | ** Against | |
| Street Level Health Project | ** Support | |
| Sunita Jain Anti-Trafficking Initiative, Loyola Law School | ** Support | |
| Technet | ** Against | |
| TODEC Legal Center | ** Support | |
| Torrance Area Chamber of Commerce | ** Against | |
| Tri-County Chamber Alliance | ** Against | |
| United Chamber Advocacy Network | ** Against | |
| Valley Industry & Commerce Association | ** Against | |
| West Ventura County Business Alliance | ** Against | |
| Western Carwash Association | ** Against | |
| Western Electrical Contractors Association | ** Against | |
| Western Growers Association | ** Against | |
| Western States Council Of Sheet Metal Workers | ** Support | |
| Wine Institute | ** Against | |
| Women's Employment Right's Clinic of Golden Gate University | ** Support | |
| Worksafe | ** Support | |
| Yuba Sutter Chamber of Commerce | ** Against |
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 1234 |
THIRD READING
Bill No: AB 1234
Author: Ortega (D), et al.
Amended: 7/17/25 in Senate
Vote: 21
SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 4-1, 6/25/25
AYES: Smallwood-Cuevas, Cortese, Durazo, Laird
NOES: Strickland
SENATE JUDICIARY COMMITTEE: 11-2, 7/15/25
AYES: Umberg, Allen, Arreguín, Ashby, Caballero, Durazo, Laird, Stern, Wahab, Weber Pierson, Wiener
NOES: Niello, Valladares
SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/29/25
AYES: Caballero, Cabaldon, Grayson, Richardson, Wahab
NOES: Seyarto, Dahle
ASSEMBLY FLOOR: 50-14, 6/4/25 - See last page for vote
SUBJECT: Employment: nonpayment of wages: complaints
SOURCE: California Federation of Labor Unions
Center for Workers’ Rights
Bet Tzedek
DIGEST:
This bill (1) makes specified changes to the process by which the Labor Commissioner investigates and adjudicates employee complaints of wage theft, as specified, and (2) authorizes the Labor Commissioner to impose an administrative fee with any order, decision or award, as specified.
ANALYSIS:
Existing law:
- Establishes within the Department of Industrial Relations (DIR), various entities including the Division of Labor Standards Enforcement (DLSE) under the direction of the Labor Commissioner (LC), and empowers the LC with ensuring a just day’s pay in every workplace and promotes economic justice through robust enforcement of labor laws. (Labor Code §79-107)
- Requires the LC and authorized deputies and representatives, upon the filing of a claim by an employee as specified, to, among other things, take assignments of wage claims including claims for loss of wages, as specified. (Labor Code §96)
- Establishes a citation process for the LC to enforce violations of the minimum wage that includes, but is not limited to, the following procedural requirements:
- A citation issued to an employer must be in writing and shall describe the nature of the violation, including reference to the statutory provision alleged to have been violated, if contract wages are unpaid, or both.
- The LC shall promptly take all appropriate action to enforce the citation and to recover the civil penalty assessed, wages, liquidated damages, and any applicable penalties, as specified.
- To contest a citation, a person shall, within 15 business days after service of the citation, notify the office of the LC that appears on the citation of their appeal by a request for an informal hearing. The LC or their deputy or agent shall, within 30 days, hold a hearing.
- The decision of the LC shall consist of a notice of findings, findings, and an order, all of which shall be served on all parties to the hearing within 15 days after the hearing by regular first-class mail.
- Any amount found due by the LC as a result of a hearing shall become due and payable 45 days after notice of the findings, written findings, and order have been mailed to the party assessed. A writ of mandate may be taken from this finding to the appropriate superior court.
- As a condition to filing a petition for a writ of mandate, the petitioner seeking the writ shall first post a bond with the LC equal to the total amount of any minimum wages, contract wages, liquidated damages, and overtime compensation that are due and owing, as specified.
- A person to whom a citation has been issued shall, in lieu of contesting a citation pursuant to this section, transmit to the office of the LC designated on the citation the amount specified for the violation within 15 business days after issuance of the citation. (Labor Code §1197.1 et seq.)
- Requires the LC, within 15 days after the hearing is concluded, to file in the office of the division a copy of the order, decision, or award (ODA). The ODA shall include a summary of the hearing and the reasons for the decision. Additionally, the ODA includes any sums found owing, damages proved, and any penalties awarded pursuant to the Labor Code, including interest on all due and unpaid wages, as specified. (Labor Code §98.1)
- Upon filing of the ODA, requires the LC to:
- Serve a copy of the decision personally, by first-class mail, or in the manner specified in Section 415.20 of the Code of Civil Procedure on the parties.
- Advise the parties of their right to appeal the decision or award and further advise the parties that failure to do so within 10 days shall result in the decision or award becoming final and enforceable as a judgment by the superior court.
(Labor Code §98.1 and §98.2)
- Specifies that if no appeal of the ODA is filed within the period specified, the ODA shall, in the absence of fraud, be deemed the final order. Existing law then requires the LC to file, within 10 days of the ODA becoming final, a certified copy of the final order with the clerk of the superior court of the appropriate county unless a settlement has been reached by the parties and approved by the LC. Judgment shall be entered immediately by the court clerk in conformity therewith. (Labor Code §98.2)
- Provides that in case of willful failure by the judgment debtor to comply with a final judgment, the division or the judgment creditor may request the court to apply the sanctions provided in Section 708.170 of the Code of Civil Procedure including an order requiring a person to appear before the court. Failure to appear can result in a warrant to have the person brought before the court to answer for the failure to appear. (Labor Code §98.2)
- As an alternative to a judgment lien, upon the order becoming final, a lien on real property may be created by the LC recording a certificate of lien, for amounts due under the final order and in favor of the employee or employees named in the order, with the county recorder of any county in which the employer’s real property may be located, at the LC’s discretion and depending upon information the LC obtains concerning the employer’s assets. (Labor Code §98.2)
- Provides that, upon payment of the amount due under the final order, the LC shall issue a certificate of release, releasing the lien created per the above. Unless the lien is satisfied or released, a lien under this section shall continue until 10 years from the date of its creation. (Labor Code §98.2)
- Requires the LC to make every reasonable effort to ensure that judgments are satisfied, including taking all appropriate legal action. (Labor Code §98.2)
- Authorizes, until January 1, 2029, a public prosecutor to prosecute an action, either civil or criminal, for a violation of certain provisions of the labor code or to enforce those provisions independently. (Labor Code §181)
This bill:
- Revises the existing wage claim investigation process to specify that if the LC determines that no further action will be taken on an employee claim, then the LC shall, within 30 days of receipt of the complaint, notify the complainant of that determination. If the LC declines to continue to investigate, the claimant may pursue remedies through any alternative forum available, as specified.
- Specifies that if the LC does not make a determination that no further action will be taken, then the LC shall, within 60 days of receipt of the complaint, notify all parties against whom allegations have been made in the complaint, including the total amount of wages, penalties, and other demands due and the Labor Code sections under which the claimant asserts the defendant’s liability, as specified.
- Revises the requirements regarding the defendant’s response to a complaint to require, within 30 days of transmittal of the notice specified above, the defendant(s) to respond by either paying the full amount due as described in the notice or by filing an answer with the LC.
- Requires the defendant’s answer to, at a minimum, include both of the following:
- Whether the defendant admits to employing the complainant during any period alleged in the notice.
- If the defendant denies an employment relationship based on a worker’s classification as an independent contractor, the defendant shall provide facts to demonstrate that the classification meets the ABC test as required by state labor law.
- If the defendant denies an employment relationship for other reasons, the defendant shall name any and all known employers of the complainant or other parties potentially liable for the violations and shall include their contact information.
- Whether the defendant admits or denies owing any amount to the complainant.
- For any admission of an amount owed, authorizes the LC to issue an ODA for that amount and authorizes the ODA to be appealed pursuant to existing law.
- For any denial of liability for wages, penalties, and other demands for compensation alleged, the defendant shall set forth the particulars in which the employee complaint is inaccurate or incomplete and the facts upon which the defendant intends to rely.
- Whether the defendant admits to employing the complainant during any period alleged in the notice.
- Provides that if the defendant fails to provide an answer within 30 days of transmittal of the notice specified above, the LC shall issue an ODA in the amount stated in the notice. The ODA may be appealed pursuant to existing law.
- If the defendant provides an answer, but the answer does not meet the requirements specified above, the LC may provide the defendant with 15 additional days to submit a revised answer. After the 15 days, if the defendant fails to provide an answer as required, the LC shall issue an ODA in the amount stated in the notice which may be appealed.
- Authorizes the LC to request an answer from any new party added to the employee complaint at any point in the investigation by issuing a notice of claim to that employer within 60 days of the employer being added to the complaint.
- Provides that if the LC does not take any further action, as specified, the LC shall, within 30 days of the receipt of the response, notify all parties of the determination and authorizes a claimant to pursue remedies through any alternative forum available, as specified.
- Requires, if the LC does not make a determination on a claim, the LC to conduct an investigation of the employee complaint. The LC shall make an estimated appraisal of the amount of wages, damages, penalties, expenses, and other compensation owed and shall determine all the parties liable for the assessment. The investigation, assessment, and determination of liability shall be made within 90 days of the receipt of the defendant’s response and shall be made through the following process:
- The LC may decide to hold a mandatory investigatory and settlement conference upon providing notice of the conference to the parties.
- If the claimant fails to attend the conference, the employee complaint may be dismissed unless a claimant can provide a good cause reason for their nonappearance.
- If the defendant fails to attend the settlement conference and does not provide a good cause reason for their nonappearance, the LC may issue an ODA in the amount stated in the notice.
- Upon agreement of the claimant, the LC may hold additional mandatory investigatory and settlement conferences if additional defendants are identified during the investigation of the complaint.
- The LC may issue a subpoena to a defendant requesting copies of payroll records for the employee, as specified, during the claim period.
- The LC may decide to hold a mandatory investigatory and settlement conference upon providing notice of the conference to the parties.
- Revises the hearing timeline to require, within 90 days of the issuance of the formal complaint, as specified, the LC to set a hearing date and serve a copy of the formal complaint on all parties, along with a notice of the date, time, and place of the hearing. The LC is authorized to conduct the hearing in person, over the telephone, or via video conference.
- Authorizes, if a defendant fails to answer or appear at a hearing, the LC to issue an ODA in the amount stated in the formal complaint issued. The ODA is appealable pursuant to existing law.
- Provides that, if a defendant’s records are inaccurate or inadequate as to the precise extent of work completed and compensated by the claimant, the claimant has carried out their burden of proof if they prove that they have in fact performed work for which they were improperly compensated and produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.
- Regarding existing authority of the LC to grant relief to a defendant that fails to appear or answer to a complaint, specifies that the LC’s authority to grant relief terminates upon the defendant’s filing of an appeal.
- Specifies that the LC’s authority to investigate a claim or issue an ODA does not terminate upon the expiration of the deadlines set forth in these provisions.
- Specifies that a notice required to be given pursuant to these provisions shall be given by personal service, first-class mail, certified mail, registered mail, or by any manner that the party agrees to accept service, including, but not limited to, electronic service.
- Authorizes the LC, for an ODA granted pursuant to existing law, to impose an administrative fee of up to 30% of the amount awarded, based on the circumstances giving rise to the claim and the facts as presented during the investigation or hearing of the claim, and deposit the fee into the Wage Recovery Fund created by this bill.
- In exercising this discretion, prohibits the LC from requesting, receiving, or considering additional evidence beyond that necessary to determine the merits of the wage claim.
- Provides that if a party appeals the ODA, the amount of the administrative fee shall be adjusted proportionally to the final award, but the court shall not alter the percentage of the administrative fee as determined by the LC.
- Requires, upon appropriation by the Legislature for this express purpose, all money in the Wage Recovery Fund to be disbursed by the LC, as specified, only to persons determined by the LC to have been damaged by the failure of an employer to pay wages, penalties and other damages.
- Requires that any disbursed funds subsequently recovered by the LC from a liable party shall be returned to the fund, as specified.
- Requires the LC, upon request by a defendant at a hearing for a formal complaint, to waive any or all of the administrative fee, provided that all of the following are satisfied:
- The ODA issued under these provisions does not impose liability for penalties related to an employer’s willful failure to pay an employee upon termination or resignation.
- The defendant shall attest in writing that it:
- Does not have a prior ODA or judgment issued against them within the past 10 years for engaging in illegal conduct related to a wage dispute or other violations under the jurisdiction of the LC.
- Did not enter into a settlement agreement within the past 10 years concerning prior illegal conduct related to a wage dispute or other violations under the jurisdiction of the LC. Specifies that a payment made on owed wages does not constitute a settlement agreement for purposes of this provision.
- Provides that if an appeal to an ODA is filed in superior court, the appeal is classified as an unlimited civil case. Specifies that a party seeking appeal is unsuccessful if they withdraw their appeal without a judgment. Adds to the grounds for an employee to be deemed successful, that the defendant voluntarily pays an amount greater than zero.
- Prohibits a court from consolidating an appeal filed under these provisions with any other action not arising out of, or related to, the wage claim covered by the underlying ODA absent an executed agreement in writing by all parties.
Background
California leads the nation with some of the strongest workplace protections for workers. Unfortunately, those laws are meaningless if they are not implemented or enforced, leaving workers struggling to recoup owed wages. Wage theft in California, which impacts low-wage workers disproportionately, is well documented. Wage theft captures many labor law violations including violations of the minimum wage, overtime, denied meal periods, or misclassification of employees as independent contractors, among others. A 2022 report to the Legislature on the state’s wage claim adjudication process reveals that there were nearly 19,000 wage claims filed in 2021 with a total of $335 million being owed to workers.[1] Due to challenges in staffing, resources, and a growing case backlog, only approximately $40 million has been paid in awards or settlements through the wage claim adjudication unit of the LC.[2]
Need for this bill? According to the author: “Despite the best efforts of the LC and other enforcement agencies, state-level enforcement of labor law violations is inadequate. There are numerous barriers to enforcement even if agencies were well-funded, but instead, these agencies are underfunded and understaffed – both Cal/OSHA and the LC’s Office have vacancy rates above 30%... Enforcement agencies need more tools to make sure workers are paid for all the hours they work at the appropriate rate. AB 1234 reduces the LC Office’s wage theft backlog by compelling employer participation in the process, thus avoiding unnecessary delays.”
[NOTE: Please see the Senate Labor, Public Employment and Retirement Committee analysis on this bill for more background information and information on prior and related legislation.]
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No
According to the Senate Appropriations Committee:
- The Department of Industrial Relations (DIR) indicates that it would incur first-year costs of $13.1 million, and $12.1 million annually thereafter, to implement the provisions of the bill (Labor Enforcement and Compliance Fund).
- By classifying the appeal of the Labor Commissioner’s order, decision or award (ODA) as an unlimited civil case, this bill could result in an increased number of civil actions. Consequently, the bill could result in potentially significant cost pressures to the courts; the magnitude is unknown (Trial Court Trust Fund (TCTF)). The specific number of new actions that could be filed under the bill also is unknown; however, it generally costs about $10,500 to operate a courtroom for an eight-hour day. Courts are not funded on the basis of workload, and increased pressure on TCTF may create a need for increased funding for courts from the General Fund. The enacted 2025-26 budget includes $38 million in ongoing support from the General Fund to continue to backfill TCTF for revenue declines.
SUPPORT: (Verified 8/29/25)
California Federation of Labor Unions, AFL-CIO (Co-source)
Center for Workers’ Rights (Co-source)
Bet Tzedek (Co-source)
American Federation of State, County and Municipal Employees, AFL-CIO
Asian Law Caucus
Attorney General Rob Bonta
California Coalition for Worker Power
California Domestic Workers Coalition
California Employment Lawyers Association
California Farmworker Coalition
California Federation of Teachers, AFT, AFL-CIO
California Immigrant Policy Center
California League of United Latin American Citizens
California Nurses Association
California Rural Legal Assistance Foundation
California Safety and Legislative Board of SMART – Transportation Division California State Association of Electrical Workers
California State Pipe Trades Council
Central California Environmental Justice Network
Central Coast Alliance United for a Sustainable Economy
Centro Binacional de Desarrollo Indigena Oaxaqueño
Centro Legal de la Raza
Chinese Progressive Association
CLEAN Carwash Worker Center
Community Legal Services in East Palo Alto
Employee Rights Center
Equal Rights Advocates
Filipino Community Center
Garment Worker Center
Inland Empire Labor Council, AFL-CIO
Instituto De Educacion Popular Del Sur De California
Los Angeles Alliance for a New Economy
Maintenance Cooperation Trust Fund
Mission Action
Mixteco/Indigena Community Organizing Project
North Valley Labor Federation
Pilipino Workers Center
Public Counsel
Santa Clara County Wage Theft Coalition
South of Market Community Action Network
Street Level Health Project
Sunita Jain Anti-Trafficking Initiative Loyola Law School
TODEC Legal Center
Western States Council of Sheet Metal Workers
Women's Employment Rights Clinic of Golden Gate University
Worksafe
OPPOSITION: (Verified 8/29/25)
Acclamation Insurance Management Services
Agricultural Council of California
Allied Managed Care
American Subcontractors Association of California
Anaheim Chamber of Commerce
Associated General Contractors of California
Associated General Contractors - San Diego Chapter
Brea Chamber of Commerce
California Alliance of Family Owned Businesses
California Apartment Association
California Association of Sheet Metal & Air Conditioning Contractors National
California Chamber of Commerce
California Farm Bureau
California Hotel & Lodging Association
California Landscape Contractors Association
California League of Food Producers
California Manufacturers & Technology Association
California Retailers Association
California State Council of the Society for Human Resource Management
California Trucking Association
Carlsbad Chamber of Commerce
Chino Valley Chamber of Commerce
Coalition of Small and Disabled Veteran Businesses
Colusa County Chamber of Commerce
Corona Chamber of Commerce
El Dorado County Chamber of Commerce
El Dorado Hills Chamber of Commerce
Elk Grove Chamber of Commerce
Flasher Barricade Association
Folsom Chamber of Commerce
Gateway Chambers Alliance
Glendora Chamber of Commerce
Greater Coachella Valley Chamber of Commerce
Greater High Desert Chamber of Commerce
Housing Contractors of California
LA Cañada Flintridge Chamber of Commerce
Lake Elsinore Valley Chamber of Commerce
Lincoln Area Chamber of Commerce
Long Beach Area Chamber of Commerce
Murrieta/Wildomar Chamber of Commerce
National Federation of Independent Business
Newport Beach Chamber of Commerce
Norwalk Chamber of Commerce
Oceanside Chamber of Commerce
Orange County Business Council
Palos Verdes Peninsula Chamber of Commerce
Paso Robles and Templeton Chamber of Commerce
Rancho Cucamonga Chamber of Commerce
Rancho Mirage Chamber of Commerce
Roseville Area Chamber of Commerce
Santa Clarita Valley Chamber of Commerce
Shingle Springs/Cameron Park Chamber of Commerce
Simi Valley Chamber of Commerce
Society of Human Resources Management California
Southwest California Legislative Council
TechNet
Torrance Area Chamber of Commerce
Tri-County Chamber Alliance
United Chamber Advocacy Network
Valley Industry & Commerce Association
West Ventura County Business Alliance
Western Carwash Association
Western Electrical Contractors Association
Western Growers Association
Wine Institute
Yuba Sutter Chamber of Commerce
ARGUMENTS IN SUPPORT:
According to sponsors of the measure: “Current procedures for processing wage claims involve significant delays, often taking two or more years before a hearing is scheduled. Employers are not required to engage in the wage claim process and can fail to appear or respond to claims, refuse to communicate with the LCO, or otherwise deliberately delay the process leading to prolonged resolution times and hindering workers’ ability to recover unpaid wages. AB 1234 puts in place procedures to reduce the backlog at the Labor Commissioner’s Office by focusing on employer failure to respond to wage theft claims that unnecessarily drag out cases.”
ARGUMENTS IN OPPOSITION:
A coalition of employer organizations, including the California Chamber of Commerce, are opposed to the measure arguing that although they support the goal of expediting claims through the LC’s office, especially in circumstances where the employer does not take the claim seriously, they have some concerns about the proposed procedural changes. Among other things, they write:
“AB 1234 imposes a thirty percent ‘administrative fee’ on every single order, decision, or award issued by the Labor Commissioner. [Consultant notes recent amendments change from a mandatory 30 percent fee to authorizing the LC to impose up to a 30 percent fee] This is a penalty by another name. It is an automatic thirty percent increase of whatever amount is found owed by the employer, which may already include penalties…
Recent amendments do not address this concern. The language provides that the fee shall be waived where an employer establishes several criteria. However, those criteria include that 1) the employer has never settled any wage disagreement with an employee over the last ten years and 2) the employer has never received an adverse order from the Labor Commissioner within the last yen years, regardless of the circumstances or facts…Virtually no employer will be able to attest that they have never settled any disagreement with an employee in the last ten years. Any additional ‘fee’ should solely be tied to scenarios where an employer fails to comply with the wage claim process…”
ASSEMBLY FLOOR: 50-14, 6/4/25
AYES: Addis, Aguiar-Curry, Ahrens, Alvarez, Arambula, Ávila Farías, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Caloza, Connolly, Elhawary, Fong, Gabriel, Garcia, Gipson, Mark González, Haney, Harabedian, Hart, Jackson, Kalra, Krell, Lee, Lowenthal, McKinnor, Muratsuchi, Ortega, Papan, Patel, Pellerin, Quirk-Silva, Ransom, Celeste Rodriguez, Rogers, Schiavo, Schultz, Sharp-Collins, Solache, Soria, Stefani, Valencia, Ward, Wicks, Wilson, Zbur, Rivas
NOES: Alanis, Davies, DeMaio, Dixon, Ellis, Gallagher, Jeff Gonzalez, Hadwick, Hoover, Macedo, Patterson, Sanchez, Tangipa, Wallis
NO VOTE RECORDED: Bains, Bauer-Kahan, Carrillo, Castillo, Chen, Flora, Irwin, Lackey, Nguyen, Pacheco, Petrie-Norris, Ramos, Michelle Rodriguez, Blanca Rubio, Ta
Prepared by: Alma Perez-Schwab / L., P.E. & R. / (916) 651-1556
8/30/25 16:16:07
**** END ****
SENATE COMMITTEE ON APPROPRIATIONS
Senator Anna Caballero, Chair
2025 - 2026 Regular Session
AB 1234 (Ortega) - Employment: nonpayment of wages: complaints
Version: July 17, 2025 | Policy Vote: L., P.E. & R. 4 - 1, JUD. 11 - 2 |
Urgency: No | Mandate: No |
Hearing Date: August 18, 2025 | Consultant: Robert Ingenito |
Bill Summary:
AB 1234 would (1) make specified changes to the process by which the Labor Commissioner investigates and adjudicates employee complaints of wage claims, as specified, and (2) authorize the Labor Commissioner to impose an administrative fee with any order, decision or award, as specified.
Fiscal Impact:
- The Department of Industrial Relations (DIR) indicates that it would incur first-year costs of $13.1 million, and $12.1 million annually thereafter, to implement the provisions of the bill (Labor Enforcement and Compliance Fund).
- By classifying the appeal of the Labor Commissioner’s order, decision or award (ODA) as an unlimited civil case, this bill could result in an increased number of civil actions. Consequently, the bill could result in potentially significant cost pressures to the courts; the magnitude is unknown (Trial Court Trust Fund (TCTF)). The specific number of new actions that could be filed under the bill also is unknown; however, it generally costs about $10,500 to operate a courtroom for an eight-hour day. Courts are not funded on the basis of workload, and increased pressure on TCTF may create a need for increased funding for courts from the General Fund. The enacted 2025-26 budget includes $38 million in ongoing support from the General Fund to continue to backfill TCTF for revenue declines.
Background:
Wage theft is the failure of an employer to pay wages due to an employee. Wage theft affects low-wage workers disproportionately, and captures many labor law violations, including the minimum wage, overtime, denied meal periods, and/or misclassification of employees as independent contractors.
Under current law, a worker may file a wage theft claim with the Labor Commissioner’s Office (LCO) within DIR’s Division of Labor Standard’s Enforcement (DLSE), which is then tasked with resolving wage theft claims by investigating, facilitating a resolution with the worker and employee, and holding a hearing when necessary. In some cases, claims may go directly to civil litigation, skipping the settlement conference and hearing steps.
Once the LCO issues an ODA, the employer has a limited time after service of the LCO decision to file an appeal. If no appeal is filed within the specified period, the LCO must file a certified copy of the decision with the appropriate Superior Court and obtain a judgment against the employer for the amount owed. When the LCO does request that the court enter the judgment against the employer, the worker can choose the option of referring the judgment to the LCO’s Enforcement Unit for collection or pursue collection on their own or through the use of an external partner, such as a private attorney or advocacy groups.
DLSE’s Enforcement Unit can use a variety of means to collect judgment amounts, including levies against employers’ bank accounts and liens on properties. Additionally, DLSE calculates interest accrued on any outstanding judgment amounts for collection purposes.
Existing law prescribes specified number of days (with a maximum of 135) for each step in the wage theft adjudication process. The timeline under which DLSE is required to respond to a wage theft claim is as follows:
- 30 days from claim submission to gather information and determine if a hearing is necessary or takes no further action and notifies parties.
- Hold a hearing within 90 days of determination that a hearing is necessary.
- Within 15 days after the hearing is concluded, file an order, decision, or award.
- Within 10 days of service of an ODA, parties can appeal or the LC files the ODA with the appropriate Superior Court and the court issues a judgment against the employer.
In May, the California State Auditor released a report summarizing the findings of a DLSE audit. The Auditor reviewed the backlog of wage claims submitted by workers from 2018 to November 2023, and concluded that the LCO is not providing timely adjudication of wage claims for workers primarily because of insufficient staffing to process those claims. The backlog of grew from 22,000 at the end of 2017–18 to 47,000 at the end of 2022–23. As of November 1, 2023, more than 2,800 claims had been open for five years or more, reflecting $64 million in unpaid wages. Among other things, the report found:
- The LCO often takes two years or longer to process wage claims, with a median of 854 days to issue a decision (more than six times longer than the law allows).
- Field offices have insufficient staffing to process wage claims with vacancy rates equal to or greater than 10 percent, and 13 field offices with vacancy rates greater than 30 percent. The Auditor estimates that the LCO’s office needs hundreds of additional positions to resolve its backlog. Contributing to the high vacancy rate is an ineffective and lengthy hiring process and non-competitive salaries.
- DLSE’s Enforcement Unit’s work results in only a small percentage of successful payment to workers. Between January 2018 and November 2023, about 28 percent of employers did not make LCO ordered payments. The LCO consequently obtained judgments against those employers. In roughly 24 percent of judgments during that time, or about 5,000 cases, the workers referred their judgments to the Enforcement Unit. The unit successfully collected the entire judgment amount in only 12 percent of those judgments, or in about 600 cases.
Proposed Law:
This bill would, among other things, do the following:
- Specify that, for the purposes of calculating the statute of limitations for any employee complaint investigated by the LCO, the action commences upon the employee’s filing of their complaint.
- Specify that, if the LCO determines that no further action will be taken on an employee complaint, the LCO must notify the complainant of that determination within 30 days of receipt of the complaint, and specifies that, in this case, the employee may pursue any other remedies available to them, with the tolling of any statute of limitations based on the date when the employee filed their complaint with the LCO, as long as the subsequent action is commenced within one year of the date of this notice.
- Specify that, if the LCO does not determine to take no further action pursuant to (2), the LCO must notify all parties to the complaint within 60 days of receipt of the complaint. Specifies that this notice must contain the allegations asserted in the complaint, including the total amount of wages, penalties, and other demands for compensation alleged, and that, if the complaint did not include a total amount owed, the LCO may calculate a value based on the allegations and any investigation it has conducted. Specifies that this notice must also identify the section of the Labor Code under which liability is asserted.
- Require defendants to respond to a complaint within 30 days of its transmittal, by either paying in full the amount due or by filing an answer that includes whether the defendant admits employing the complainant during the relevant period, and whether the defendant admits or denies any of the amounts owed. Specifies that, if the defendant admits to any amount owed, the LCO may issue an ODA for that amount, which may be appealed, and that the LCO may continue investigating any claims not admitted. Requires the defendant to set forth how the complaint is inaccurate or incomplete and the facts upon which it relies when the defendant denies an allegation.
- Specify that, if a defendant fails to answer the complaint within 30 days, the LCO must issue an ODA in the amount stated in the notice, which may be appealed, and specifies that, if the defendant’s answer is insufficient, the LCO may permit the defendant an additional 15 days to submit a revised answer. Specifies that, after 15 days, if the defendant still fails to provide an answer, the LCO must issue an ODA in the amount stated in the notice, which may be appealed.
- Permit the LCO to request an answer from any new party that is added to the complaint at any point in the investigation by issuing a notice of claim to that new employer within 60 days of when the employer is added to the complaint, and requires this notice to include information on the allegations, amount alleged due, and the section of the Labor Code alleged to have been violated.
- Specify that, if the LCO determines to prosecute the claim or to not take further action, it must notify all parties of that determination within 30 days of receipt of the employer’s answer. Specifies that, if the LCO declines to continue to investigate the complaint, the claimant may pursue remedies through any alternative forum available, with the tolling of the statute of limitations based on the date the employee filed their complaint, so long as the subsequent action is commenced within one year of the date of the notice.
- Require the LCO to conduct an investigation of the complaint if it does not determine to prosecute the claim or take no further action, and to make an estimated appraisal of the amount of wages, damages, penalties, expenses, and other compensation owed and determine all parties who are liable for the assessment. Requires these actions be made within 90 days of the receipt of the employer’s answer.
- Permit the LCO to hold a mandatory investigatory and settlement conference, and specifies that the LCO may dismiss the complaint if the complainant fails to attend, or to issue an ODA if the defendant fails to attend, without good cause. Upon agreement of the claimant, permits the LCO to hold additional mandatory investigatory and settlement conferences if additional defendants are identified during the investigation.
- Permit the LCO to issue a subpoena requesting copies of records for the employee during the claim period, and permits the LCO to issue a subpoena for all records required to be maintained by the relevant wage order, or to any other parties or for any other information, as determined by the LCO.
- Require the LCO to issue a formal complaint that includes the allegations in the employee complaint concerning the time period of the claim, the laws violated, and all parties liable, and the amount of compensation requested, any applicable interest, and administrative fees.
- Require the LCO to set a hearing date within 90 days of the issuance of the formal complaint, and serve a copy of the formal complaint on all parties with a notice of the hearing. Permits the LCO to conduct the hearing in person, over the phone, or by video conference.
- Specify that, if a defendant fails to appear, the LCO may issue an ODA in the amount stated in the formal complaint, which may be appealed, as provided.
- Specify that, if a defendant’s records are inaccurate or inadequate as to the precise extent of work completed and compensated by the claimant, the claimant has carried out their burden of proof if they prove that they have in fact performed work for which they were improperly compensated and produce sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.
- Specify that the LCO’s authority to amend an order or relieve a defendant from the ODA when the employer fails to appear or answer terminates when the defendant files an appeal with the superior court.
- Specify that the LCO’s authority to investigate a claim or issue an ODA does not terminate upon the expiration of the deadlines provided in these provisions.
- Require the LCO to file in the office of the division a copy of the ODA and serve the ODA on the parties, as specified, when an ODA is issued upon a failure of the defendant to answer or appear, and permits service to take place by any manner that a party agrees to accept, including electronic service.
- Require the ODA to include a description of the interest accrued and the reasons for the decision, and specifies that an ODA shall be deemed a determination of the defendant’s liability for the unpaid wages specified.
- Authorize an ODA to impose an administrative fee of up to 30 percent of the award, as specified.
- Require the LCO to waive the administrative fee if requested by the defendant at the hearing, if (1) the ODA does not impose liability for penalties pursuant to Labor Code section 203, (2) the defendant attests in writing that they do not have a prior ODA issued against them within the past 10 years for engaging in illegal conduct related to a dispute over wages or other violations over which the LCO has jurisdiction, and (3) the defendant attests in writing that they have not entered into any settlement agreement within the past 10 years concerning prior illegal conduct related to a dispute over wages or other violations within the LCO’s jurisdiction, except for any payment pursuant to admissions to a complaint.
- Specify that an appeal of an ODA must be classified as an unlimited civil case.
- Specify that a party seeking appeal is unsuccessful if they withdraw their appeal without a judgment, and an employee is successful if the defendant voluntarily pays an amount greater than zero, for the purposes of provisions that require the court to determine and award costs and reasonable attorney’s fees against a party that filed for appeal.
- Specify that a court hearing an action filed to appeal an ODA has jurisdiction over the entire wage dispute, including related wage claims not raised before the LCO.
- Specify that a court may not consolidate an action filed to appeal an ODA with any other action that did not arise out of, or is related to the wage claim covered by the underlying ODA, absent an executed agreement in writing by all parties.
- Require a court to grant an application filed by the LCO to vacate a judgment deemed final upon the LCO’s granting of relief from an ODA entered because of the failure of the employer to appear.
Related Legislation:
- SB 261 (Wahab) would (1) require the DLSE to post online information of employers with unsatisfied ODAs on a claim for unpaid wages, (2) prescribe when a posting can be removed, (3) subject, for final judgments unsatisfied after a period of 180 days, the employer to a civil penalty not to exceed three times the outstanding judgment amount, and (4) authorize the Labor Commissioner to adopt regulations to enforce these provisions. The bill is pending in the Assembly Appropriations Committee.
- SB 310 (Wiener) would permit the penalty for failure to pay wages owed to employees to be recovered through an independent civil action, as specified. SB 310 is currently on the Senate Inactive File
- SB 355 (Perez) would (1) require employers with unsatisfied judgments for owed wages to provide documentation to the LC that the judgment is fully satisfied or the judgment debtor entered into an agreement for the judgment to be paid in installments, as prescribed, (2) subject the judgment debtor employer to a civil penalty for violations, and (3) require the LC to notify the Tax Support Division of the Employment Development Department of unsatisfied judgments as a notice of potential tax fraud. The bill is pending in the Assembly Appropriations Committee.
- AB 485 (Ortega) would require state agencies to deny a new license or permit, or the renewal of an existing license or permit, for employers that have outstanding wage theft judgments and have not obtained a surety bond or reached an accord with the affected employee to satisfy the judgment. The bill is pending in this Committee.
- AB 1002 (Gabriel) would authorize the AG to bring a civil action for the temporary suspension or permanent revocation of a contractor’s license for failing to pay workers the full amount of wages they are entitled to, failing to pay a wage judgment or for being in violation of an injunction or court order regarding the payment of wages. The bill is pending in the Assembly Appropriations Committee.
- AB 594 (Maienschein, Chapter 659, Statutes of 2023), until January 1, 2029, clarified and expanded public prosecutors’ authority to enforce the violation of specified labor laws through civil or criminal actions without specific authorization from the DLSE.
Staff Comments: The fee authorization in the bill would likely not be sufficient to cover costs resulting from the additional workload to DIR.
-- END --
Senator Thomas Umberg, Chair
2025-2026 Regular Session
Bill No: AB 1234 (Author:Ortega)
Version: June 18, 2025
Hearing Date: July 15, 2025
Fiscal: Yes
Urgency: No
Consultant: ID
SUBJECT
Employment: nonpayment of wages: complaints
DIGEST
This bill revises the process by which the Labor Commissioner investigates and adjudicates employee complaints of wage claims, including by requiring an employer to file an answer to a complaint, issuing a formal complaint, and holding a hearing, as specified, and requires the Labor Commissioner to impose an administrative fee with any order, decision or award, as specified.
EXECUTIVE SUMMARY
California has some of the strongest protections across the country for workers and for ensuring they can be made whole when they are wronged by their employer. These laws include rules for a minimum wage, rest and meal breaks, overtime pay, and the timely payment of wages, and rules against retaliation for an employee asserting their rights. Yet laws are only as good as the extent to which they are followed and enforced, and labor law violations continue to be a major problem across the state. When an employee is not paid the wages they are owed, they can file a complaint with the Labor Commissioner’s office, which will investigate the claim and can decide to adjudicate the claim through a hearing, issue a citation for certain violations of labor law, prosecute the case, or close their complaint without taking further action. However, complaints before the Labor Commissioner often take an incredibly long time to be resolved, and even workers who receive an order, decision, or award in their favor from the Labor Commissioner struggle to collect what they are due from their employer.
In order to make the process more efficient and promote employers’ participation in the claim process of the Labor Commissioner, AB 1234 revises the process by which the Labor Commissioner investigates, adjudicates, and resolves employee complaints. It creates a specified timeline by which employers must respond to complaints, requires the Labor Commissioner to issue decisions in favor of an employee when the employer fails to provide an answer to the complaint, requires the Labor Commissioner to issue formal complaints after an investigation and hold a hearing within 90 days of that complaint, and requires that the Labor Commissioner, except when waived as specified, impose a 30 percent administrative fee with any order, decision, or award. AB 1234 also makes a variety of changes to the appeal process.
AB 1234 is sponsored by the California Federation of Labor Unions, AFL-CIO, the Center for Workers’ Rights, and Bet Tzedek, and is supported by a number of other labor groups. It is opposed by the California Chamber of Commerce and a coalition of regional chambers of commerce, contractors and subcontractors’ associations, and business groups. It previously passed out of the Senate Labor, Public Employment and Retirement Committee by a vote of 4 to 1.
PROPOSED CHANGES TO THE LAW
Existing law:
- Establishes within the Department of Industrial Relations (DIR) the Division of Labor Standards Enforcement (DLSE) under the direction of the Labor Commissioner’s Office (LCO), and empowers the LCO to ensure a just day’s pay in every work place and to promote justice through the robust enforcement of labor law. Empowers the LCO to enforce, among other things, wage and hour law, anti-retaliation provisions, and employer notice requirements (Lab. Code §§ 79 et seq.)
- Authorizes the LCO to investigate employee complaints, conduct hearings, and issue orders, decisions, and awards regarding complaints. Requires that the LCO notify the parties within 30 days of the filing of a complaint whether a hearing will be held, the LCO will prosecute the case, or no further action will be taken. Requires that, if the LCO will hold a hearing, the hearing be held within 90 days of the date of that determination, with the option of postponement, as specified. Specifies the required notice that the LCO must provide the parties regarding the complaint and the proceeding, and allows a defendant to file an answer within 10 days of service of the notice and complaint. (Lab. Code § 98.)
- Requires the LCO, within 15 days after the hearing is concluded, to file in the office of the division, and serve upon the parties, a copy of the order, decision, or award (ODA). The ODA shall include a summary of the hearing and the reasons for the decision. Requires that the ODA include any sums found owing, damages proved, and any penalties awarded pursuant to the Labor Code, including interest on all due and unpaid wages, as specified. (Lab. Code §98.1.)
- Permits a party to appeal the ODA to a superior court within 10 days of being served the ODA, and requires the superior court to hear the case de novo. Requires a party appealing an ODA to post a bond in the amount of the ODA with the court. Specifies that, if an appealing party is unsuccessful, the court must determine the costs and reasonable attorney’s fees incurred by the other parties to the appeal, and assess that amount to the losing party. Specifies that an employee is successful if the court awards an amount greater than zero. (Lab. Code § 98.2.)
- Specifies that, if no appeal of the ODA is filed within the period specified, the ODA shall, in the absence of fraud, be deemed the final order. Requires the LCO to file, within 10 days of the ODA becoming final, a certified copy of the final order with the clerk of the superior court of the appropriate county, unless a settlement has been reached by the parties and approved by the LCO. Requires that judgment be entered immediately by the court clerk in conformity therewith. (Lab. Code § 98.2.)
- Permits the LCO to prosecute all actions for the collection of wages, penalties, and demands of persons whom the LCO judges to be financially unable to employ counsel, if the LCO believes the claims are valid and enforceable. (Lab. Code § 98.3.)
- Establishes a citation process for the LCO to enforce violations of the minimum wage that includes, but is not limited to, issuing citations, making and noticing findings as prescribed, requiring that any amounts due after a hearing be due 45 days after notice of the finding, and taking all appropriate actions to enforce the citation and recover an assessed civil penalty. Permits a person to contest the citation within 15 business days after service of the citation, and requires the LCO to hold an informal hearing on the citation within 30 days of receiving a request to contest the citation. (Lab. Code §§ 1197.1.)
- Authorizes, until January 1, 2029, a public prosecutor, defined as the Attorney General, a district attorney, a city attorney, a county counsel, or any other city or county prosecutor, to prosecute an action, either civil or criminal, for a violation of certain provisions of the Labor Code. Specifies that such an action by a public prosecutor must be limited to redressing violations that occur within the public prosecutor’s geographic jurisdiction, unless the public prosecutor has statewide authority. Requires the court to award a prevailing plaintiff in actions brought by a public prosecutor reasonable attorney’s fees and costs, including expert witness fees and costs. (Lab. Code §§ 180, 181.)
- Establishes the Private Attorney’s General Act (PAGA), providing a process through which an aggrieved employee may bring a civil action to recover a civil penalty for labor law violations on behalf of themselves and other current or former employees who suffered similar harm. Provides a specified civil penalty available through an employee’s action when the provisions of the Labor Code violated do not specifically provide for a civil penalty. (Lab. Code §§ 2699 et seq.)
- Specifies that, if an employer willfully fails to pay, without abatement or reduction, the wages of an employee who is discharged or quits, the wages of the employee are continued as a penalty from the date they are due until they are paid, or until an action is commenced to recover them, for no more than 30 days. (Lab. Code § 203.)
- Requires an employer to discontinue business in this state, unless the employer has obtained a bond from a surety company admitted to do business in this state and has filed a copy of that bond with the Labor Commissioner, if a final judgment against an employer arising from the employer’s nonpayment of wages for work performed in this state remains unsatisfied after a period of 30 days after the time to appeal therefrom has expired and no appeal therefrom is pending. (Lab. Code § 238.)
- Specifies that, in any action for the nonpayment of wages, the court must award interest on all due and unpaid wages, to accrue from the date that the wages were due and payable, and at a rate as specified. (Lab. Code § 218.6.)
This bill:
- Specifies that, for the purposes of calculating the statute of limitations for any employee complaint investigated by the LCO, the action commences upon the employee’s filing of their complaint.
- Specifies that, if the LCO determines that no further action will be taken on an employee complaint, the LCO must notify the complainant of that determination within 30 days of receipt of the complaint, and specifies that, in this case, the employee may pursue any other remedies available to them, with the tolling of any statute of limitations based on the date when the employee filed their complaint with the LCO, as long as the subsequent action is commenced within one year of the date of this notice.
- Specifies that, if the LCO does not determine to take no further action pursuant to (2), the LCO must notify all parties to the complaint within 60 days of receipt of the complaint. Specifies that this notice must contain the allegations asserted in the complaint, including the total amount of wages, penalties, and other demands for compensation alleged, and that, if the complaint did not include a total amount owed, the LCO may calculate a value based on the allegations and any investigation it has conducted. Specifies that this notice must also identify the section of the Labor Code under which liability is asserted.
- Requires defendants to respond to a complaint within 30 days of its transmittal, by either paying in full the amount due or by filing an answer that includes whether the defendant admits employing the complainant during the relevant period, and whether the defendant admits or denies any of the amounts owed. Specifies that, if the defendant admits to any amount owed, the LCO may issue an ODA for that amount, which may be appealed, and that the LCO may continue investigating any claims not admitted. Requires the defendant to set forth how the complaint is inaccurate or incomplete and the facts upon which it relies when the defendant denies an allegation.
- Specifies that, if a defendant fails to answer the complaint within 30 days, the LCO must issue an ODA in the amount stated in the notice, which may be appealed, and specifies that, if the defendant’s answer is insufficient, the LCO may permit the defendant an additional 15 days to submit a revised answer. Specifies that, after 15 days, if the defendant still fails to provide an answer, the LCO must issue an ODA in the amount stated in the notice, which may be appealed.
- Permits the LCO to request an answer from any new party that is added to the complaint at any point in the investigation by issuing a notice of claim to that new employer within 60 days of when the employer is added to the complaint, and requires this notice to include information on the allegations, amount alleged due, and the section of the Labor Code alleged to have been violated.
- Specifies that, if the LCO determines to prosecute the claim or to not take further action, it must notify all parties of that determination within 30 days of receipt of the employer’s answer. Specifies that, if the LCO declines to continue to investigate the complaint, the claimant may pursue remedies through any alternative forum available, with the tolling of the statute of limitations based on the date the employee filed their complaint, so long as the subsequent action is commenced within one year of the date of the notice.
- Requires the LCO to conduct an investigation of the complaint if it does not determine to prosecute the claim or take no further action, and to make an estimated appraisal of the amount of wages, damages, penalties, expenses, and other compensation owed and determine all parties who are liable for the assessment. Requires these actions be made within 90 days of the receipt of the employer’s answer.
- Permits the LCO to hold a mandatory investigatory and settlement conference, and specifies that the LCO may dismiss the complaint if the complainant fails to attend, or to issue an ODA if the defendant fails to attend, without good cause. Upon agreement of the claimant, permits the LCO to hold additional mandatory investigatory and settlement conferences if additional defendants are identified during the investigation.
- Permits the LCO to issue a subpoena requesting copies of records for the employee during the claim period, and permits the LCO to issue a subpoena for all records required to be maintained by the relevant wage order, or to any other parties or for any other information, as determined by the LCO.
- Requires the LCO to issue a formal complaint that includes the allegations in the employee complaint concerning the time period of the claim, the laws violated, and all parties liable, and the amount of compensation requested, any applicable interest, and administrative fees.
- Requires the LCO to set a hearing date within 90 days of the issuance of the formal complaint, and serve a copy of the formal complaint on all parties with a notice of the hearing. Permits the LCO to conduct the hearing in person, over the phone, or by video conference.
- Specifies that, if a defendant fails to appear, the LCO may issue an ODA in the amount stated in the formal complaint, which may be appealed, as provided.
- Specifies that, if a defendant’s records are inaccurate or inadequate as to the precise extent of work completed and compensated by the claimant, the claimant has carried out their burden of proof if they prove that they have in fact performed work for which they were improperly compensated and produce sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.
- Specifies that a hearing conducted pursuant to these provisions is governed by the division and by the rules of practice and procedure adopted by the LCO.
- Specifies that the LCO’s authority to amend an order or relieve a defendant from the ODA when the employer fails to appear or answer terminates when the defendant files an appeal with the superior court.
- Specifies that the LCO’s authority to investigate a claim or issue an ODA does not terminate upon the expiration of the deadlines provided in these provisions.
- Requires the LCO to file in the office of the division a copy of the ODA and serve the ODA on the parties, as specified, when an ODA is issued upon a failure of the defendant to answer or appear, and permits service to take place by any manner that a party agrees to accept, including electronic service.
- Requires the ODA to include a description of the interest accrued and the reasons for the decision, and specifies that an ODA shall be deemed a determination of the defendant’s liability for the unpaid wages specified.
- Specifies that an ODA must impose an administrative fee of 30 percent of the ODA, which must be deposited into a Wage Recovery Fund for disbursement by the LCO only to persons determined by the LCO to have been damaged by the failure to pay wages and penalties and for other damages by an employer. Specifies that any disbursement must be made pursuant to a claim for recovery from the fund made in accordance with procedures prescribed by the LCO, and that any disbursed funds subsequently recovered by the LCO from a liable party pursuant to an assignment of the claim to the LCO must be returned to the fund.
- Requires the LCO to waive the administrative fee if requested by the defendant at the hearing, if:
- The ODA does not impose liability for penalties pursuant to Labor Code section 203;
- The defendant attests in writing that they do not have a prior ODA issued against them within the past 10 years for engaging in illegal conduct related to a dispute over wages or other violations over which the LCO has jurisdiction; and
- The defendant attests in writing that they have not entered into any settlement agreement within the past 10 years concerning prior illegal conduct related to a dispute over wages or other violations within the LCO’s jurisdiction, except for any payment pursuant to admissions to a complaint.
- Specifies that an appeal of an ODA must be classified as an unlimited civil case.
- Specifies that a party seeking appeal is unsuccessful if they withdraw their appeal without a judgment, and an employee is successful if the defendant voluntarily pays an amount greater than zero, for the purposes of provisions that require the court to determine and award costs and reasonable attorney’s fees against a party that filed for appeal.
- Specifies that a court hearing an action filed to appeal an ODA has jurisdiction over the entire wage dispute, including related wage claims not raised before the LCO.
- Specifies that a court may not consolidate an action filed to appeal an ODA with any other action that did not arise out of, or is related to the wage claim covered by the underlying ODA, absent an executed agreement in writing by all parties.
- Requires a court to grant an application filed by the LCO to vacate a judgment deemed final upon the LCO’s granting of relief from an ODA entered because of the failure of the employer to appear.
COMMENTS
- Author’s statement
According to the author:
The [Labor Commissioner] wage claim process is broken. It involves significant delays, often taking two or more years before a first hearing is scheduled. Employers are not required to engage and can fail to appear or respond to claims, dragging out the process and hindering workers’ ability to recover unpaid wages.
AB 1234 speeds up the process by compelling employer participation, thus avoiding unnecessary delays and reducing the LC Office’s wage theft backlog. It also strengthens the procedural requirements for employers that challenge claims, including requiring documentation and evidence for disputes over claim amounts. These procedural enhancements will shorten the time it takes to resolve claims and help workers recover a greater percentage of the money owed to them.
- Wage theft and labor law violations are a major issue in California
California has some of the strongest protections across the country for workers and for ensuring they can be made whole when they are wronged by their employer. These laws include rules for a minimum wage, rest and meal breaks, overtime pay, and the timely payment of wages, and rules against retaliation for an employee asserting their rights. Many of California’s labor laws include statutory or civil penalties and fines for employers who violate them. These laws ensure that California’s workforce and economy are the strongest in the world and that workers’ rights, fair treatment and pay, and dignity are respected.
However, laws are only as good as the extent to which they are followed and enforced, and labor law violations continue to be a major problem across the state. A 2017 study found that 19.2% of low-wage workers experience minimum wage violations in California each year, with employers stealing almost two billion dollars from California workers every year though minimum wage violations.[1] Another study found even higher losses for California workers: across three metropolitan areas covering Los Angeles, San Diego, and the Bay Area, employers were estimated to have stolen an average of 2.3 to 4.6 billion dollars in earned wages from workers each year between 2014 and 2023.[2] Furthermore, the number of underpaid workers has more than doubled since 2014, with a dramatic increase of 56 percent from 2022 to 2023.[3] This wage theft disproportionately affects African American, Latinx, noncitizen, and women workers. Given these statistics, wage theft remains a bigger problem of theft in California than all other forms of theft.[4]
- Labor law and the options available to aggrieved workers
The Labor Code outlines the minimum pay, rest and meal breaks, overtime pay, paid sick leave, and other rights and minimum requirements due to workers in California. When an employer does not comply with these requirements, it can result in an unpaid wage claim. Examples include when an employer pays an employee less than the minimum wage, fails to pay the employee for their overtime work, prohibits an employee from taking meal or rest breaks or their paid sick leave, or makes unauthorized deductions from an employee’s pay. In addition, some employers must pay workers their wages twice each calendar month on days designated in advance as regular paydays. (Lab. Code § 204.) When a worker is fired or terminated, an employer generally must pay the worker their final due wages immediately. (Lab. Code §§ 201-203.) When an employer fails to timely pay its workers, the worker can also bring a claim for nonpayment of wages. The Labor Code provides for various statutory and civil penalties for violations of its provisions, and also provides that, in an action for the nonpayment of wages, the court must award interest on all due and unpaid wages. (Lab. Code § 218.6.)
When an employer has failed to pay a worker what they are owed under the law, the worker generally must file a wage claim with the Labor Commissioner (LCO), sue for damages, or file a representative civil action against the employer through California’s Private Attorneys General Act (PAGA). A public prosecutor, which includes the Attorney General, a district attorney, a city attorney, a county counsel, or any other city or county prosecutor, can prosecute a civil or criminal violation of specified provisions of the Labor Code. (Lab. Code § 181(b).)
- The Labor Commissioner is currently unable to provide workers adequate relief
When a worker files a wage claim with the LCO, the LCO can investigate and adjudicate the claim, issue a citation for certain labor law violations, or prosecute the claim themselves. (Lab. Code §§ 98, 1197, 98.3.) After receiving a complaint on unpaid wages and similar claims, the LCO may provide for a hearing to adjudicate the claim. Under current law, the LCO must notify the parties to the complaint within 30 days of the filing of the complaint whether it will hold a hearing on the complaint, prosecute the complaint itself, or close the complaint without taking any further action. (Lab. Code § 98(a).) If the LCO is to hold a hearing, it must do so within 90 days of the determination that a hearing is needed, except that it may postpone the hearing or grant additional time if doing so would lead to an equitable solution. LCO hearings are informal hearings in which the rules of evidence are relaxed, though both parties are able to call, examine, and cross examine witnesses and introduce exhibits. (Lab. Code § 98(a); Cal. Code Regs. §§ 13502, 13505.)
The LCO must serve a copy of the complaint with a notice of the hearing on all parties once a hearing is set. (Lab. Code § 98(b).) Within 10 days of this service, a defendant may file an answer that sets forth the particular facts or arguments upon which the defendant is challenging the complaint. (Lab. Code § 98(c).) This answer is generally the scope of what the defendant may argue in the hearing; evidence on an issue not raised in the answer is generally only allowed under terms and conditions set by the LCO, and the complainant is allowed a continuance to review any such new evidence. (Lab. Code § 98(e).) If the defendant fails to appear at the hearing or answer the complaint, the LCO is not currently permitted to make a default judgment. (Lab. Code § 98(f).) Instead, the LCO must hear the evidence and issue an order, decision, or award (ODA) in accordance with the evidence before it.
Unfortunately, the LCO process currently fails to provide many workers timely adjudication of their claims or actual redress. The LCO has experienced chronic staffing and funding shortages for many years, resulting in cases taking 505 days to be adjudicated on average.[5] A Legislative Analyst’s Office analysis found that about 33,000 workers file wage claims with the LCO every year, with workers reporting collecting less than 20 percent of unpaid wages owed.[6] Even when workers win at an LCO hearing, the report found that only about 50 percent manage to recover the awarded damages and penalties. The Legislative Analyst’s Office suggested increasing hiring at the LCO, streamlining the wage claim process, and having the LCO take a more active role in collections in order to address these issues.[7]
Moreover, a state audit of the LCO in 2024 found that the LCO had a backlog of 47,000 cases at the end of 2023, with more than 2,800 claims that had been open for five years or more, collectively worth $63.9 million in unpaid wages.[8] The State Auditor also found that, between 2018 and 2023, about 28 percent of employers liable for wage theft failed to make payments ordered by the LCO. With such long processing times in cases before the LCO and such low rates of recovery even after the LCO finds for the employee, many workers simply give up and withdraw their claims, or decide to settle for considerably less than the amount of wages they are owed. This ultimately favors employers, who can delay the process such that the claim is ultimately dropped, settle for much less than they owe a worker, or avoid having to pay altogether even after being found liable.
- AB 1234 proposes to restructure the Labor Commissioner to provide a more robust process for resolving wage claims
AB 1234 proposes to revise the process by which the LCO conducts hearings and issues ODAs in order to help address these issues and provide workers with faster, more effective redress when their employers steal their wages. It replaces the current timeline with one that requires the involvement and response of the employer earlier, and provides more specific requirements for an LCO hearing. It would require the LCO, upon receiving a complaint, to determine whether to continue with an investigation and adjudication of the complaint, prosecute the claim itself, or to close the complaint without taking further action. If the LCO decides not to take any further action on a complaint, AB 1234 would require the LCO to make that determination within 30 days and notify the complainant. If the LCO does not close the complaint without further action, it must notify the parties to the complaint of the allegations within 60 days of receiving the complaint. This notice must include a description of the allegations, amounts alleged due to the worker, and the Labor Code sections relevant to the claims.
The defendant would then have 30 days to respond to the complaint, either by paying the amounts alleged due in the complaint, or by filing an answer with the LCO. This answer would need to address whether the defendant admits to the complainant being their employee and whether the defendant admits or denies any of the claims regarding wages owed to the complainant. If the defendant admits to owing any wages claimed in the complaint, the LCO would be required to issue an ODA for the amounts admitted, and the employer would be required to pay these amounts. If the defendant denies the claims, they would need to set forth in their answer the facts and reasons upon which their denial rests. The LCO may provide the defendant an extra 15 days to submit a revised answer if their original answer was insufficient. If the employer fails to provide an answer to the complaint, AB 1234 would require the LCO to issue an ODA in the amount stated in the notice of the complaint.
Upon receiving the employer’s response, AB 1234 would require the LCO to again decide whether to close the complaint without further action, prosecute the case themselves, or continue with an investigation and hearing. If the LCO plans to close the complaint or prosecute it themselves, they must notify the parties within 30 days of receiving the employer’s answer. If the LCO does not take either of those actions, it must investigate the complaint and issue a formal complaint within 90 days. The LCO may conduct a mandatory investigatory settlement conference with the parties, and may issue an ODA if either party fails to appear without good cause. The LCO also would be permitted to issue subpoenas to request copies of records relating to the employee and their wages.
Once the LCO has issued the formal complaint, they would have another 90 days to set a hearing date for the complaint. The employer may file another answer or a revised answer within 10 days of receiving notice of the hearing. The hearing would be limited to evidence on matters pleaded in the complaint and answer, except under terms and conditions imposed by the LCO, and if new evidence is introduced, the complainant would be able to continue the hearing in order to review it. If the employer fails to appear at the hearing, the LCO may issue an ODA for the amount in the formal complaint, though the LCO would be permitted to amend or strike the ODA, or provide an employer relief from the ODA when the employer requests such an action after failing to appear.
AB 1234 includes a number of provisions regarding the appeal process and that codify various court decisions. It includes provisions that toll the statute of limitations on any wage claim on the date that the employee files their complaint with the LCO, as long as the employee pursues a civil action on that claim within one year. This change codifies the decision of the California Supreme Court in the case Cuadra v. Millan, which found that the LCO had the implied authority to toll the statute of limitations and calculate wage claims from the date of the filing of the complaint. (Cuadra v. Millan (1998) 17 Cal. 4th 855.) AB 1234 also codifies two other cases relating to appeals of the LCO’s ODAs: Arneson v. Royal Pacific Funding Corp., Inc. and Murphy v. Kenneth Cole Productions, Inc. The first change clarifies that, if a party seeking appeal is unsuccessful in their appeal, the court must award costs and reasonable attorney’s fees. AB 1234 codifies the clarification in Arneson v. Royal Pacific Funding Corp., Inc. that a party seeking appeal is considered unsuccessful if they withdraw their appeal without judgment, and that an employee is successful even if the court awards a smaller amount than what the LCO had awarded, or the defendant voluntarily pays. (Arneson v. Royal Pacific Funding Corp., Inc. (239 Cal. App. 4th 1275, 1280.) Lastly, AB 1234 codifies the rule in Murphy v. Kenneth Cole Productions, Inc. that a reviewing court may review the entire wage dispute, including related wage claims that were not raised before the LCO. (Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal. 4th 1094.) AB 1234 also specifies that any appeal of an ODA by the LCO is to be an unlimited civil action.
- AB 1234 provides for an administrative fee meant to support aggrieved workers
AB 1234 also requires an ODA issued by the LCO to include an administrative fee of 30 percent of the amount of the ODA. It requires this fee to be deposited into a Wage Recovery Fund for the purposes of disbursement to individuals determined by the LCO to have been damaged by the failure of any employer to pay wages and penalties and other damages. However, a defendant would be able to request that the administrative fee be waived at the LCO hearing, and the LCO would be required to waive it if the employer demonstrates that: the ODA does not impose a liability for the failure to timely pay a worker their wages upon the termination of their employment; the defendant attests in writing that they have not had a prior ODA issued against them in the previous 10 years; and that they have not entered into any settlement agreement for a labor law violation within the past 10 years.
- Opposition’s concerns
The opposition argues that the administrative fee created by AB 1234 is effectively an excessive penalty. They argue that it could harm employers who do not commit willful violations of the labor laws, and regardless of whether they engage in the LCO process. They further assert that the provisions for waiver of the fee are too restrictive and would not apply to any employers.
The sponsors assert that the administrative fee is meant to act as a disincentive for employers to delay the LCO process, ostensibly by providing a sizeable added cost to any ODA that is issued because the employer does not engage in the process or loses at the hearing. Indeed, the fee would act to discourage employers from disregarding the process or any ODA issued against them, as the amount owed would be considerably larger with the 30 percent fee. Moreover, while it is true that the fee would apply regardless of the labor code violation at issue or whether the violation was “willful,” it only applies when the LCO has issued an ODA – as in, only when the employer has lost or has failed to answer the complaint or appear at the hearing. Thus, the employer has either failed to engage in the LCO process, or has been found to violate labor law. It is difficult to differentiate between “willful” and “accidental” violations of law; employers are required to follow the law, and whether an employer “accidentally” failed to do so or knowingly did so is irrelevant. When an individual violates any other law, unless mens rea is a required element of the offense, it typically matters little whether they knew they were breaking the law or not. Ignorance of the law is no defense.
While the sponsors assert that the administrative fee will act as a deterrent to bad behavior by employers, the funds collected will themselves be used to help make workers whole. These funds would help workers who have been unable to recover from their employers to still receive the compensation they deserve. Thus, the administrative fee would address one of the continued issues with the current remedies for workers: that many are unable to recover even when they win before the LCO or at court.
The opposition also argues that AB 1234’s requirement that the LCO issue an ODA for the employee when the employer fails to respond to the complaint is overly harsh. While they refer to the current processes for default judgments in civil court, in which the court may still review the evidence before issuing a default judgment, that is not always the case. In unlawful detainer cases, for example, when a tenant fails to appear to answer the unlawful detainer complaint, a landlord may request a default judgment, and the court must grant the default. (Code Civ. Proc. § 1169.) It is also worth noting that AB 1234 still permits an employer to request that the LCO amend or strike a party or relieve the employer from the ODA if the employer fails to answer the complaint or appear.
- Amendments
The author has accepted amendments that make the administrative fee permissive up to 30 percent of the total amount of the ODA, based on the circumstances giving rise to the claim and the facts presented during the hearing. A full mock up of these amendments is attached at the end of this analysis.
- Arguments in support
According to the California Federation of Labor Unions, AFL-CIO, the Center of Workers’ Rights, and Bet Tzedek, who are the sponsors of AB 1234:
Wage theft ends up costing workers billions of dollars in stolen wages. A 2017 study found that 19.2% of low-wage workers experience minimum wage violations in California each year, with employers stealing almost two billion dollars from California workers though minimum wage violations. Widespread wage theft puts law-abiding employers at a disadvantage, costs taxpayers, and deprives the state of needed revenue. Wage theft has a disproportionate impact on disadvantaged and immigrant communities, increasing inequality. People of color, especially Black and Latino workers, are overrepresented in low-wage industries with higher rates of wage theft, including agriculture, construction, garment, and hospitality.
Despite the best efforts of the Labor Commissioner and other enforcement agencies, state-level enforcement of labor law violations is inadequate. The agencies are underfunded and understaffed with the vacancy rate at the Labor Commissioner’s Office (LCO) above 30%. Even when fully funded and staffed, there are millions of employers and workplaces in California, and wage theft is pervasive with about 33,000 workers filing wage claims with the Labor Commissioner every year.
Current procedures for processing wage claims involve significant delays, often taking two or more years before a hearing is scheduled. Employers are not required to engage in the wage claim process and can fail to appear or respond to claims, refuse to communicate with the LCO, or otherwise deliberately delay the process leading to prolonged resolution times and hindering workers’ ability to recover unpaid wages.
AB 1234 puts in place procedures to reduce the backlog at the Labor Commissioner’s Office by focusing on employer failure to respond to wage theft claims that unnecessarily drag out cases. The bill requires the LCO to promptly notify employers when a worker files a wage claim and requires a full response in a reasonable amount of time. It allows the LCO to issue an Order, Decision, or Award (ODA) based on the worker’s claim if the employer fails to respond or appear, creating a disincentive for employers to delay or ignore the process. It also strengthens the procedural requirements for employers that challenge claims, including requiring documentation of specific facts and evidence for disputes over the amount of the claim, The bill will clarify the appeals process to conform with current case law and provide for efficient processing of appeals to the wage claim.
The bill also includes an administrative fee to create a disincentive for employers to intentionally starve out workers by delaying the process for years. Workers who have lost wages have to sacrifice pay and time to pursue wage claim cases and scofflaw employers can exploit that by waiting out wage claims. The fee ensures employers participate in wage cases and do not intentionally drag out meritorious cases. The LCO is required to waive some or all the fee for first-time offenders.
- Arguments in opposition
According to the California Chamber of Commerce, which is opposed to AB 1234:
AB 1234 imposes a thirty percent “administrative fee” on every single order, decision, or award issued by the Labor Commissioner.1 This is a penalty by another name. It is an automatic thirty percent increase of whatever amount is found owed by the employer, which may already include penalties.
That penalty applies regardless of the type of violation, whether the violation was willful or not, whether the employer appeared at the hearing or not, whether penalties were already assessed under other provisions of the Labor Code, and regardless of the size of the employer. It also applies to any ODA where the defendant is an individual person, which is a possibility under Labor Code section 588.1.
This new, automatic penalty is not only excessive, but it also conflicts with established public policy. As the California Supreme Court reminded us just last year:
[T]he purpose of imposing civil penalties is typically, as with punitive damages, not primarily to compensate, but to deter and punish . . . Those who proceed on a reasonable, good faith belief that they have conformed their conduct to the law's requirements do not need to be deterred from repeating their mistake, nor do they reflect the sort of disregard of the requirements of the law and respect for others’ rights that penalty provisions are frequently designed to punish. (Naranjo v. Spectrum Security Services, Inc., 15 Cal.5th 1056, 1075 (2024).)
AB 1234 penalizes employers who exercise their right to a hearing, especially in cases where legitimate, good faith disputes exist. For example, disputes over reimbursements or whether specific managers provided timely rest breaks often arise without clear documentation or with fact-specific issues. Automatically imposing a penalty on an employer for exercising their right to a hearing is unjust, particularly when they are seeking a resolution to a genuine dispute.
Recent amendments do not address this concern. The language provides that the fee shall be waived where an employer establishes several criteria. However, those criteria include that 1) the employer has never settled any wage disagreement with an employee over the last ten years and 2) the employer has never received an adverse order from the Labor Commissioner within the last yen years, regardless of the circumstances or facts.
Practically speaking, this “waiver” will apply to no one. Virtually no employer will be able to attest that they have never settled any disagreement with an employee in the last ten years. Any additional “fee” should solely be tied to scenarios where an employer fails to comply with the wage claim process, which is the stated intent of the bill and aligns with the analysis from the Assembly Committee on the Judiciary:
. . . . the opponents raise an interesting point: The fee under this bill applies to all awards, regardless of whether or not the employer engaged in the process by answering in a timely manner and participating in any hearing or settlement conference. If the purpose of this bill is to encourage employers to engage in process, then the author may wish to consider if the 30% fee/penalty should be reserved for employers who refuse to participate or otherwise attempt to unreasonably delay the process. (page 6)
Another concern with AB 1234 is that it would mandate a detailed answer be filed prior to the initial informal conference. Wage claims brought before the Labor Commissioner’s office are often filed by employees who, at least initially, are not represented by counsel. Consequently, the initial complaint may lack sufficient detail. The initial conference presents an opportunity for both parties to meet with the Labor Commissioner’s office (and often each other) to flesh out the claim. The Labor Commissioner’s office often helps the claimant add potential claims or requested penalties to the claim based on those conversations. If settlement is not reached, an answer then makes sense at that stage. Otherwise, to require the answer earlier will result in many answers simply stating the employer has insufficient knowledge to address the claim. At the very least, if the answer were required earlier, the law should allow for a general denial like in state court. The bill is also unclear about whether it applies to claims presently pending before the Labor Commissioner and how timing would work in those claims at various stages of the process. […]
Presently, if the defendant does not appear or answer on time, the Labor Commissioner may issue an ODA “in accordance with the evidence.” That current law mirrors what happens in civil court where there is a default: the plaintiff must provide a declaration laying out the evidence after a default is issued. The court may then request a hearing if there are questions about the declaration prior to entering a default judgment. AB 1234 provides that the Labor Commissioner must enter ODA in the full amount requested even if there is no evidence other than the complaint where there is no answer, and that it can do the same if the defendant is not present at the conference or hearing. We believe that the Labor Commissioner, like the courts, should consider the evidence presented and have the right to request testimony or further evidence from the claimant. Otherwise, simply being late in filing an answer would automatically result in an ODA in the full amount claimed, regardless of whether the claimant was accurate or truthful. While we understand the goal of expediting claims against non-responsive employers, we believe the Labor Commissioner should be able to review the evidence and request further testimony, if needed, to ensure the allegations are accurate.
Proposed section 98.2(f) provides that a court may not consolidate any action filed for appeal with any other action that does not arise out of the wage claim covered by the ODA. Courts should have discretion to manage their own dockets to enable the just and efficient resolution of cases. See, e.g., CRC Standard No. 2.1. If there is a situation in which consolidating one action with another would achieve those goals, the same rules as in other cases should apply. That principle also makes sense in conjunction with proposed 98.2(e), which says that the court shall have jurisdiction over claims not stated in the underlying wage claim.
Proposed section 98.2(a) provides that all appeals to the superior court shall be classified as an unlimited civil case. There are already thresholds surrounding when a case is classified as unlimited. If the amount in controversy does not exceed $25,000, the case is “limited” because there is a streamlined judicial process for faster resolution. We believe whether a case is classified as unlimited or limited should fall under the same demand thresholds.
Proposed 98(f) provides that while a defendant may seek relief from the Labor Commissioner under Code of Civil Procedure section 473 (which allows defaults to be set aside), the power for the Labor Commissioner to grant that relief terminates if an appeal is filed. Parties only have ten days to appeal. A party would effectively always be forced to file for an appeal instead of waiting to see if the Labor Commissioner grants relief under section 473.
Proposed 98.2(b) would require every defendant appealing to post their own bond. So, if three defendants are jointly liable for $1,000, then a bond must be posted for $3,000 because each defendant needs to post a bond. Where two defendants are the same entity, (e.g., a company and a managing agent), this is a higher hurdle to be able to appeal.
SUPPORT
Bet Tzedek (sponsor)
California Labor Federation, AFL-CIO (sponsor)
Center for Workers' Rights (sponsor)
California Immigrant Policy Center
California Nurses Association
California Rural Legal Assistance Foundation, Inc.
California Safety and Legislative Board, Smart – Transportation Division (smart – Td)
California State Association of Electrical Workers
California State Pipe Trades Council
Equal Rights Advocates
Garment Worker Center
Inland Empire Labor Council, AFL-CIO
Loyola Law School, the Sunita Jain Anti-trafficking Initiative
North Valley Labor Federation
Pilipino Workers Center
Western States Council Sheet Metal, Air, Rail and Transportation
Worksafe
OPPOSITION
Acclamation Insurance Management Services
Agricultural Council of California
Allied Managed Care
American Subcontractors Association-California
Anaheim Chamber of Commerce
Associated General Contractors
Associated General Contractors-San Diego Chapter
Brea Chamber of Commerce
California Alliance of Family Owned Businesses
California Apartment Association
California Association of Sheet Metal & Air Conditioning Contractors National
Association
California Chamber of Commerce
California Farm Bureau
California Hotel & Lodging Association
California Landscape Contractors Association
California League of Food Producers
California Manufacturers and Technology Association
California Retailers Association
California State Council of the Society for Human Resource Management (CALSHRM)
California Trucking Association
Carlsbad Chamber of Commerce
Chino Valley Chamber of Commerce
Coalition of Small and Disabled Veteran Businesses
Colusa County Chamber of Commerce
Corona Chamber of Commerce
Elk Grove Chamber of Commerce
Flasher Barricade Association
Gateway Chambers Alliance
Glendora Chamber of Commerce
Greater Coachella Valley Chamber of Commerce
Greater High Desert Chamber of Commerce
Housing Contractors of California
LA Canada Flintridge Chamber of Commerce
Lake Elsinore Valley Chamber of Commerce
Long Beach Area Chamber of Commerce
Murrieta Wildomar Chamber of Commerce
National Federation of Independent Business (NFIB)
Newport Beach Chamber of Commerce
Norwalk Chamber of Commerce
Oceanside Chamber of Commerce
Orange County Business Council
Palos Verdes Peninsula Chamber of Commerce
Paso Robles and Templeton Chamber of Commerce
Rancho Cucamonga Chamber of Commerce
Rancho Mirage Chamber of Commerce
Roseville Area Chamber of Commerce
Santa Clarita Valley Chamber of Commerce
Simi Valley Chamber of Commerce
Southwest California Legislative Council
Torrance Area Chamber of Commerce
Valley Industry and Commerce Association
West Ventura County Business Alliance
Western Car Wash Association
Western Electrical Contractors Association
Western Growers Association
Wine Institute
RELATED LEGISLATION
Pending Legislation:
SB 648 (Smallwood-Cuevas, 2025) authorizes the Labor Commissioner to investigate and issue a citation or initiate a civil action for a violation of state laws regarding tips, and specifies the procedures for issuing, contesting, or enforcing judgments for any such citation. SB 648 is currently pending before the Assembly Appropriations Committee.
SB 355 (Pérez, 2025) requires, if a judgment debtor to an order, decision, or award made by the Labor Commissioner fails to provide specified documentation to the Labor Commissioner within 60 days that the order, decision, or award becomes final, that the Department of Motor Vehicles must suspend the judgment debtor’s driver’s license within 90 days of a notice of the unsatisfied judgment, and provides for a civil penalty. SB 355 is currently pending before the Assembly Appropriations Committee.
SB 310 (Wiener, 2025) provides that, for certain penalties associated with failure to pay wages, the civil penalties may be collected by the worker through an independent civil action. SB 310 is currently on the Senate inactive file.
SB 261 (Wahab, 2025) requires the Labor Commissioner to post to its website a copy of orders, decisions, or awards filed by the Labor Commissioner and the information of employers with unsatisfied judgments, as specified, and establishes a civil penalty for a final judgment for nonpayment of wages that remains unpaid for 180 days. SB 261 is currently pending before the Assembly Judiciary Committee.
Prior Legislation:
AB 594 (Maienschein, Ch. 659, Stats. 2023) authorized the Attorney General, district attorneys, city attorneys, county counsel, or any other city prosecutors to enforce specified provisions of the Labor Code. AB 594 provided for its provisions to be repealed on January 1, 2029.
SB 796 (Dunn, Ch. 906, Stats. 2004) created the Labor Code Private Attorneys General Act of 2004, providing that an employee may bring a civil action on behalf of themselves and other employees who were subjected to a violation of the labor code by their employer, instead of pursuing their claim through the LCO.
PRIOR VOTES:
Senate Labor, Public Employment and Retirement Committee (Ayes 4, Noes 1)
Assembly Floor (Ayes 50, Noes 14)
Assembly Appropriations Committee (Ayes 11, Noes 1)
Assembly Judiciary Committee (Ayes 8, Noes 2)
Assembly Labor and Employment Committee (Ayes 4, Noes 0)
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Amendments Mock-up for AB-1234 (Ortega (A))
(Amendments may be subject to technical changes by Legislative Counsel)
The people of the State of California do enact as follows:
SECTION 1. Section 98 of the Labor Code is amended to read:
98. (a) (1) (A) The Labor Commissioner is authorized to investigate employee complaints. The Labor Commissioner may provide for a hearing in any action to recover wages, penalties, and other demands for compensation, including liquidated damages if the employee complaint alleges payment of a wage less than the minimum wage fixed by an order of the Industrial Welfare Commission or by statute, properly before the division or the Labor Commissioner, including orders of the Industrial Welfare Commission, and shall determine all matters arising under the Labor Commissioner’s jurisdiction.
(B) The Labor Commissioner may also provide for a hearing to recover civil penalties due pursuant to Section 558 against any employer or other person acting on behalf of an employer, including, but not limited to, an individual liable pursuant to Section 558.1.
(C) It is within the jurisdiction of the Labor Commissioner to accept and determine claims from holders of payroll checks or payroll drafts returned unpaid because of insufficient funds, if, after a diligent search, the holder is unable to return the dishonored check or draft to the payee and recover the sums paid out.
(D) For the purpose of calculating the statute of limitations for any employee complaint investigated under this section, the action shall commence upon the filing of the employee complaint.
(2) If the Labor Commissioner determines that no further action will be taken on the employee complaint, the Labor Commissioner shall, within 30 days of the receipt of an employee complaint, notify the complainant of the determination. If the Labor Commissioner declines to continue to investigate an employee complaint, the claimant may pursue remedies through any alternative forum available with the tolling of the statute of limitations based on the date the employee complaint was made, so long as the subsequent action is commenced within one year of the date the notice was provided pursuant to this subdivision.
(3) If the Labor Commissioner does not make a determination pursuant to paragraph (2) that no further action will be taken, the Labor Commissioner shall, within 60 days of receipt of an employee complaint, notify all parties against which the employee complaint has been filed of the allegations asserted in the complaint, including the total amount of wages, penalties, and other demands for compensation alleged due. If the employee complaint did not include the complainant’s best estimate of wages and penalties owed, the Labor Commissioner may calculate a monetary value based on the complainant’s allegations and any investigation it has conducted within the time period allowed. The notice shall identify the Labor Code section under which the claimant asserts the defendant’s liability if it is ascertainable from the employee’s complaint or if it is ascertainable from other available information within the time period allowed.
(4) Within 30 days of transmittal of the notice described in paragraph (3), the defendants shall respond by either paying the full amount due as described in the notice or by filing an answer with the Labor Commissioner. An answer shall, at a minimum, include both of the following:
(A) Whether the defendant admits to employing the complainant during any period alleged in the notice.
(i) If the defendant denies an employment relationship based on a worker’s classification as an independent contractor, the defendant shall provide facts to demonstrate that the classification meets the requirements in Article 1.5 (commencing with Section 2775) of Chapter 2 of Division 3.
(ii) If the defendant denies an employment relationship for a reason other than as specified in clause (i), the defendant shall name any and all known employers of the complainant or other parties potentially liable for the violations during the claim period, and shall include their contact information.
(B) Whether the defendant admits or denies owing any amount to the complainant.
(i) For any admission of an amount owed, the Labor Commissioner may issue an order, decision, or award for that amount as set forth in Section 98.1. The order, decision, or award may be appealed under Section 98.2. The Labor Commissioner may continue to investigate any claims for which the defendant did not admit to owing.
(ii) For any denial of liability for wages, penalties, and other demands for compensation alleged, the defendants shall set forth the particulars in which the employee complaint is inaccurate or incomplete and the facts upon which the defendant intends to rely.
(5) If the defendant fails to provide an answer within 30 days of transmittal of the notice described in paragraph (3), the Labor Commissioner shall issue an order, decision, or award in the amount stated in the notice, as set forth in Section 98.1. The order, decision, or award may be appealed under Section 98.2. If the defendant provides an answer, but the answer does not meet the requirements of this section, the Labor Commissioner may provide the defendant with 15 additional days to submit a revised answer. After the 15 days, if the defendant fails to provide an answer within the requirements of this section, the Labor Commissioner shall issue an order, decision, or award in the amount stated in the notice described in paragraph (3), as set forth in Section 98.1. The order, decision, or award may be appealed under Section 98.2.
(6) The Labor Commissioner may request an answer from any new party added to the employee complaint at any point in the investigation by issuing a notice of claim to that employer within 60 days of the employer being added to the employee complaint. The notice of claim shall include the information specified in paragraph (3). The employer’s response to the notice of claim shall be governed by paragraphs (4) and (5).
(b) If the Labor Commissioner determines to take action in accordance with Section 98.3 or determines that no further action will be taken on the employee complaint, the Labor Commissioner shall, within 30 days of the receipt of the answer, notify all parties of the determination. If the Labor Commissioner declines to continue to investigate an employee complaint, the claimant may pursue remedies through any alternative forum available with the tolling of the statute of limitations based on the date the employee complaint was made, so long as the subsequent action is commenced within one year of the date the notice was provided pursuant to this subdivision.
(c) If the Labor Commissioner does not make a determination pursuant to subdivision (b), the Labor Commissioner shall conduct an investigation of the employee complaint. The Labor Commissioner shall make an estimated appraisal of the amount of wages, damages, penalties, expenses, and other compensation owed and shall determine all the parties liable for the assessment. The investigation, assessment, and determination of liability shall be made within 90 days of the receipt of the answer described in paragraph (4) of subdivision (a), and shall be made through the following process:
(1) The Labor Commissioner may decide to hold a mandatory investigatory and settlement conference upon providing notice of the conference to the parties. If the claimant fails to attend the conference, the employee complaint may be dismissed unless a claimant can provide a good cause reason for their nonappearance. If the defendant fails to attend the settlement conference and does not provide a good cause reason for their nonappearance, the Labor Commissioner may issue an order, decision, or award in the amount stated in the notice provided by paragraph (3) of subdivision (a). The order, decision, or award shall be issued as set forth in Section 98.1 and may be appealed under Section 98.2. Upon agreement of the claimant, the Labor Commissioner may hold additional mandatory investigatory and settlement conferences if additional defendants are identified during the investigation of the employee complaint.
(2) The Labor Commissioner may issue a subpoena pursuant to Section 92 to a defendant requesting copies of records for the employee, as described in Section 226, during the claim period. The Labor Commissioner may also issue a subpoena pursuant to Section 92 for all records required to be maintained by the relevant wage order, and to any other parties or for any other information as determined by the Labor Commissioner.
(3) The Labor Commissioner shall issue a formal complaint that includes the allegations in the employee complaint concerning the time period of the claim, the laws violated, and all parties liable, and the amount of compensation requested, applicable interest, and administrative fees available under Section 98.1.
(d) Within 90 days of the issuance of the formal complaint described in paragraph (3) of subdivision (c), the Labor Commissioner shall set a hearing date and serve a copy of the formal complaint on all parties, along with a notice of the date, time, and place of the hearing. The Labor Commissioner may conduct the hearing in person, over the telephone, or via video conference.
(1) Within 10 days after service of the notice of the hearing and the formal complaint, a defendant may file an answer or a revised answer with the Labor Commissioner in any form as the Labor Commissioner may prescribe, setting forth the particulars in which the formal complaint is inaccurate or incomplete and the facts upon which the defendant intends to rely.
(2) No pleading other than the formal complaint and answer of the defendant or defendants shall be required. Both shall be in writing and shall conform to the form and the rules of practice and procedure adopted by the Labor Commissioner.
(3) Evidence on matters not pleaded in the answer or produced in response to a subpoena issued by the Labor Commissioner shall be allowed only on terms and conditions the Labor Commissioner shall impose. In all these cases, the claimant shall be entitled to a continuance for purposes of review of the new evidence.
(4) If a defendant fails to appear, the Labor Commissioner may issue an order, decision, or award in the amount stated in the formal complaint issued pursuant to paragraph (3) of subdivision (c). The order, decision, or award shall be issued as set forth in Section 98.1, and may be appealed under Section 98.2.
(5) If a defendant’s records are inaccurate or inadequate as to the precise extent of work completed and compensated by the claimant, the claimant has carried out their burden of proof if they prove that they have in fact performed work for which they were improperly compensated and produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.
(e) A hearing conducted pursuant to this chapter is governed by the division and by the rules of practice and procedure adopted by the Labor Commissioner. It is the intent of the Legislature that hearings held pursuant to this section be conducted in an informal setting preserving the rights of the parties.
(f) A defendant failing to appear or answer, or subsequently contending to be aggrieved in any manner by want of notice of the pendency of the proceedings, may apply to the Labor Commissioner for relief in accordance with Section 473 of the Code of Civil Procedure. The Labor Commissioner may afford this relief. The Labor Commissioner’s authority to grant relief under this subdivision terminates upon the defendant’s filing of an appeal under Section 98.2. Absent an appeal under Section 98.2, no right to relief, including the claim that the findings or award of the Labor Commissioner or judgment entered thereon are void upon their face, shall accrue to the defendant in any court unless prior application is made to the Labor Commissioner in accordance with this chapter.
(g) (1) Whenever a claim is filed under this chapter against a person operating or doing business under a fictitious business name, as defined in Section 17900 of the Business and Professions Code, which relates to the person’s business, the division shall inquire at any point during the procedures set forth in this section whether the name of the person is the legal name under which the business or person has been licensed, registered, incorporated, or otherwise authorized to do business.
(2) The division may amend an order, decision, or award to conform to the legal name of the business or the person who is the defendant to a wage claim, if it can be shown that proper service was made on the defendant or the defendant’s agent, unless a judgment had been entered on the order, decision, or award pursuant to subdivision (d) of Section 98.2. The Labor Commissioner may apply to the clerk of the superior court to amend a judgment that has been issued pursuant to a final order, decision, or award to conform to the legal name of the defendant, if it can be shown that proper service was made on the defendant or the defendant’s agent.
(h) A party who has received actual notice of a claim before the Labor Commissioner shall, while the matter is before the Labor Commissioner, notify the Labor Commissioner in writing of any change in that party’s business or personal address within 10 days after the change in address occurs.
(i) The Labor Commissioner’s authority to investigate a claim or issue an order, decision, or award does not terminate upon the expiration of the deadlines set forth in this section.
(j) A notice required to be given pursuant to this section shall be given by personal service, first-class mail, certified mail, registered mail, in the manner specified in Section 415.20 of the Code of Civil Procedure, or by any manner that the party agrees to accept service, including, but not limited to, electronic service.
SEC. 2. Section 98.1 of the Labor Code is amended to read:
98.1. (a) Within 15 days after the hearing described in Section 98 is concluded, or upon a failure to answer or appear as described in Section 98, the Labor Commissioner shall file in the office of the division a copy of the order, decision, or award. Upon filing of the order, decision, or award, the Labor Commissioner shall serve a copy of the decision on the parties by personal service, first-class mail, certified mail, or registered mail, in the manner specified in Section 415.20 of the Code of Civil Procedure, or by any manner that a party agrees to accept service, including, but not limited to, electronic service. The notice shall also advise the parties of their right to appeal the decision or award and further advise the parties that failure to do so within the period prescribed by this chapter shall result in the decision or award becoming final and enforceable as a judgment by the superior court.
(b) For the purpose of this section, an order, decision, or award shall include any sums found owing, damages proved, interest accrued, any penalties awarded pursuant to this code, and the reasons for the decision. An order, decision, or award issued under this section shall be deemed a determination of the defendant’s liability for the unpaid wages specified in the order, decision, or award.
(c) All awards granted pursuant to a hearing under this chapter shall accrue interest on all due and unpaid wages at the same rate as prescribed by subdivision (b) of Section 3289 of the Civil Code. The interest shall accrue until the wages are paid from the date that the wages were due and payable as provided in Part 1 (commencing with Section 200) of Division 2.
(d) (1) In an order, decision, or award granted under this chapter, the Labor Commissioner may impose an administrative fee of up to 30 percent of the amount awarded, based on the circumstances giving rise to the claim and the facts as presented during the investigation or hearing of the claim. In exercising this discretion, the Labor Commissioner shall not request, receive, or consider additional evidence beyond that necessary to determine the merits of the wage claim. The administrative fee shall be deposited into the Wage Recovery Fund, which is hereby created. If a party appeals the order pursuant to Section 98.2, the amount of the administrative fee shall be adjusted proportionally to the final award, but the court shall not alter the percentage of the administrative fee as determined by the Labor Commissioner. An order, decision, or award granted under this chapter shall impose an administrative fee payable in the amount of 30 percent of the order, decision, or award. The administrative fee shall be deposited into the Wage Recovery Fund, which is hereby created.
(2) Upon appropriation by the Legislature for this express purpose, all money in the Wage Recovery Fund shall be disbursed by the Labor Commissioner only to persons determined by the Labor Commissioner to have been damaged by the failure to pay wages and penalties and for other damages by an employer.
(3) Any disbursement shall be made pursuant to a claim for recovery from the fund in accordance with procedures prescribed by the Labor Commissioner.
(4) Any disbursed funds subsequently recovered by the Labor Commissioner from a liable party pursuant to an assignment of the claim to the Labor Commissioner for recovery of due amounts shall be returned to the fund.
(5) Upon a request by a defendant at a hearing held pursuant to subdivision (d) of Section 98, the Labor Commissioner shall waive any or all of the administrative fee, provided that all of the following are satisfied:
(A) The order, decision, or award issued under this chapter does not impose liability for penalties pursuant to Section 203.
(B) The defendant shall attest in writing that they do not have a prior order, decision, award, or judgment issued against them within the past 10 years for engaging in illegal conduct related to a dispute over wages or other violations under the jurisdiction of the Labor Commissioner.
(C) The defendant shall attest in writing that they have not entered into a settlement agreement within the past 10 years concerning prior illegal conduct related to a dispute over wages or other violations under the jurisdiction of the Labor Commissioner. A payment made pursuant to paragraph (4) of subdivision (a) of Section 98 does not constitute a settlement agreement for purposes of this subparagraph.
SEC. 3. Section 98.2 of the Labor Code is amended to read:
98.2. (a) Within 10 days after service of notice of an order, decision, or award the parties may seek review by filing an appeal to the superior court, where the appeal shall be heard de novo. The court shall charge the first paper filing fee under Section 70611 of the Government Code to the party seeking review. The fee shall be distributed as provided in Section 68085.3 of the Government Code. A copy of the appeal request shall be served upon the Labor Commissioner by the appellant. For purposes of computing the 10-day period after service, Section 1013 of the Code of Civil Procedure is applicable. An appeal filed under this section shall be classified as an unlimited civil case.
(b) As a condition to filing an appeal pursuant to this section, each appealing defendant shall first post an undertaking with the reviewing court in the amount of the order, decision, or award. The undertaking shall consist of an appeal bond issued by a licensed surety or a cash deposit with the court in the amount of the order, decision, or award. The appealing defendant shall provide written notification to the other parties and the Labor Commissioner of the posting of the undertaking. The undertaking shall be on the condition that, if any judgment is entered in favor of the employee, the appealing defendant shall pay the amount owed pursuant to the judgment, and if the appeal is withdrawn or dismissed without entry of judgment, the appealing defendant shall pay the amount owed pursuant to the order, decision, or award of the Labor Commissioner unless the parties have executed a settlement agreement for payment of some other amount, in which case the appealing defendant shall pay the amount that the appealing defendant is obligated to pay under the terms of the settlement agreement. If the appealing defendant fails to pay the amount owed within 10 days of entry of the judgment, dismissal, or withdrawal of the appeal, or the execution of a settlement agreement, a portion of the undertaking equal to the amount owed, or the entire undertaking if the amount owed exceeds the undertaking, is forfeited to the employee.
(c) If the party seeking review by filing an appeal to the superior court is unsuccessful in the appeal, the court shall determine the costs and reasonable attorney’s fees incurred by the other parties to the appeal, and assess that amount as a cost upon the party filing the appeal. A party seeking appeal is unsuccessful if they withdraw their appeal without a judgment. An employee is successful if the court awards, or a defendant voluntarily pays, an amount greater than zero.
(d) If no notice of appeal of the order, decision, or award is filed within the period set forth in subdivision (a), the order, decision, or award shall, in the absence of fraud, be deemed the final order.
(e) A court hearing an action filed under this section has jurisdiction over the entire wage dispute, including related wage claims not raised in front of the Labor Commissioner.
(f) A court shall not consolidate an action filed under this section with any other action not arising out of, or related to, the wage claim covered by underlying order, decision, or award absent an executed agreement in writing by all parties.
(g) (1) The Labor Commissioner shall file, within 10 days of the order becoming final pursuant to subdivision (d), a certified copy of the final order with the clerk of the superior court of the appropriate county unless a settlement has been reached by the parties and approved by the Labor Commissioner. Judgment shall be entered immediately by the court clerk in conformity therewith. The judgment so entered has the same force and effect as, and is subject to all of the provisions of law relating to, a judgment in a civil action, and may be enforced in the same manner as any other judgment of the court in which it is entered. Enforcement of the judgment shall receive court priority.
(2) Notwithstanding paragraph (1), a court shall grant an application filed by the Labor Commissioner to vacate a judgment deemed final under paragraph (1) upon the Labor Commissioner’s granting of relief under subdivision (f) of Section 98.
(h) (1) In order to ensure that judgments are satisfied, the Labor Commissioner may serve upon the judgment debtor, personally or by first-class mail at the last known address of the judgment debtor listed with the division, a form similar to, and requiring the reporting of the same information as, the form approved or adopted by the Judicial Council for purposes of subdivision (a) of Section 116.830 of the Code of Civil Procedure to assist in identifying the nature and location of any assets of the judgment debtor.
(2) The judgment debtor shall complete the form and cause it to be delivered to the division at the address listed on the form within 35 days after the form has been served on the judgment debtor, unless the judgment has been satisfied. In case of willful failure by the judgment debtor to comply with this subdivision, the division or the judgment creditor may request the court to apply the sanctions provided in Section 708.170 of the Code of Civil Procedure.
(i) (1) As an alternative to a judgment lien, upon the order becoming final pursuant to subdivision (d), a lien on real property may be created by the Labor Commissioner recording a certificate of lien, for amounts due under the final order and in favor of the employee or employees named in the order, with the county recorder of any county in which the employer’s real property may be located, at the Labor Commissioner’s discretion and depending upon information the Labor Commissioner obtains concerning the employer’s assets. The lien attaches to all interests in real property of the employer located in the county where the lien is created to which a judgment lien may attach pursuant to Section 697.340 of the Code of Civil Procedure.
(2) The certificate of lien shall include information as prescribed by Section 27288.1 of the Government Code.
(3) The recorder shall accept and record the certificate of lien and shall index it as prescribed by law.
(4) Upon payment of the amount due under the final order, the Labor Commissioner shall issue a certificate of release, releasing the lien created under paragraph (1). The certificate of release may be recorded by the employer at the employer’s expense.
(5) Unless the lien is satisfied or released, a lien under this section shall continue until 10 years from the date of its creation.
(j) Notwithstanding subdivision (g), the Labor Commissioner may stay execution of any judgment entered upon an order, decision, or award that has become final upon good cause appearing therefor and may impose the terms and conditions of the stay of execution. A certified copy of the stay of execution shall be filed with the clerk entering the judgment.
(k) When a judgment is satisfied in fact, other than by execution, the Labor Commissioner may, upon the motion of either party or on its own motion, order entry of satisfaction of judgment. The clerk of the court shall enter a satisfaction of judgment upon the filing of a certified copy of the order.
(l) The Labor Commissioner shall make every reasonable effort to ensure that judgments are satisfied, including taking all appropriate legal action and requiring the employer to deposit a bond as provided in Section 240.
(m) The judgment creditor, or the Labor Commissioner as assignee of the judgment creditor, is entitled to court costs and reasonable attorney’s fees for enforcing the judgment that is rendered pursuant to this section.
David Cooper & Teresa Kroeger, “Employers steal billions from workers’ paychecks each year,” Economic Policy Institute (May 10, 2017), https://www.epi.org/publication/employers-steal-billions-from-workers-paychecks-each-year/. ↑
Jake Barnes et al., Wage Theft in California: Minimum wage violations, 2014-2023, Rutgers School of Mgmt. and Lab. Rel. (May 2024), available at https://www.smlr.rutgers.edu/news-events/smlr-news/minimum-wage-theft-rises-sharply-california. ↑
Id. ↑
Ross Eisenbrey & Brady Meixell, “Wage theft is a much bigger problem than other forms of theft – but workers remain mostly unprotected,” Economic Policy Institute (Sept. 18, 2014), https://www.epi.org/publication/wage-theft-bigger-problem-forms-theft-workers/. ↑
Jeanne Kuang, “Agency battling wage theft in California is too short-staffed to do its job,” CalMatters (Oct. 17, 2022), https://calmatters.org/california-divide/2022/10/agency-battling-wage-theft/?series=unpaid-wages-california-workers. ↑
Legislative Analyst’s Office, “The 2020-2021 Budget: Improving the State’s Unpaid Wage Claim Process,” (Feb. 19, 2020), https://lao.ca.gov/Publications/Report/4165. ↑
Id. ↑
California State Auditor, “2023-104 The California Labor Commissioner’s Office: Inadequate staffing and poor oversight have weakened protections for workers,” Report No. 2023-104 (May 29, 2024), https://www.auditor.ca.gov/reports/2023-104/. ↑
SENATE COMMITTEE ON LABOR, PUBLIC EMPLOYMENT AND RETIREMENT
Senator Lola Smallwood-Cuevas, Chair
2025 - 2026 Regular
Bill No: AB 1234 Hearing Date: June 25, 2025
Author: | Ortega | ||
Version: | June 18, 2025 | ||
Urgency: | No | Fiscal: | Yes |
Consultant: | Alma Perez-Schwab | ||
SUBJECT: Employment: nonpayment of wages: complaints
KEY ISSUES
This bill revises the wage theft claims process that the Labor Commissioner (LC) must follow to investigate, hold a hearing, and make a determination relating to an employee’s complaint. Among other things, this bill: 1) permits the entry of default judgments if a defendant fails to answer an employee’s complaint, fails to attend a mandatory settlement conference without cause, or fails to appear at the hearing on the complaint; 2) requires an order, decision, or award (ODA) granted by the LC to impose an administrative fee in the amount of 30 percent of the ODA; 3) creates the Wage Recovery Fund where the administrative fees are to be deposited and disbursed to persons determined to be damaged by an employer’s failure to pay wages, as specified; 4) requires the LC to waive any or all of the administrative fees for defendants meeting specified conditions; and 5) makes an appeal of an ODA filed in superior court an unlimited case.
ANALYSIS
Existing law:
- Establishes the Department of Industrial Relations (DIR) in the Labor and Workforce Development Agency (LWDA), and vests it with various powers and duties to foster, promote, and develop the welfare of the wage earners of California, to improve their working conditions, and to advance their opportunities for profitable employment. (Labor Code §50.5)
- Establishes within the DIR, various entities including the Division of Labor Standards Enforcement (DLSE) under the direction of the Labor Commissioner (LC), and empowers the LC with ensuring a just day’s pay in every workplace and promotes economic justice through robust enforcement of labor laws. (Labor Code §79-107)
- Requires the LC and authorized deputies and representatives, upon the filing of a claim by an employee as specified, to, among other things, take assignments of wage claims including claims for loss of wages, as specified. (Labor Code §96)
- Establishes a citation process for the LC to enforce violations of the minimum wage that includes, but is not limited to, the following procedural requirements:
- A citation issued to an employer must be in writing and shall describe the nature of the violation, including reference to the statutory provision alleged to have been violated, if contract wages are unpaid, or both.
- The LC shall promptly take all appropriate action to enforce the citation and to recover the civil penalty assessed, wages, liquidated damages, and any applicable penalties, as specified.
- To contest a citation, a person shall, within 15 business days after service of the citation, notify the office of the LC that appears on the citation of their appeal by a request for an informal hearing. The LC or their deputy or agent shall, within 30 days, hold a hearing.
- The decision of the LC shall consist of a notice of findings, findings, and an order, all of which shall be served on all parties to the hearing within 15 days after the hearing by regular first-class mail.
- Any amount found due by the LC as a result of a hearing shall become due and payable 45 days after notice of the findings, written findings, and order have been mailed to the party assessed. A writ of mandate may be taken from this finding to the appropriate superior court.
- As a condition to filing a petition for a writ of mandate, the petitioner seeking the writ shall first post a bond with the LC equal to the total amount of any minimum wages, contract wages, liquidated damages, and overtime compensation that are due and owing, as specified.
- A person to whom a citation has been issued shall, in lieu of contesting a citation pursuant to this section, transmit to the office of the LC designated on the citation the amount specified for the violation within 15 business days after issuance of the citation. (Labor Code §1197.1 et seq.)
- Requires the LC, within 15 days after the hearing is concluded, to file in the office of the division a copy of the order, decision, or award (ODA). The ODA shall include a summary of the hearing and the reasons for the decision. Additionally, the ODA includes any sums found owing, damages proved, and any penalties awarded pursuant to the Labor Code, including interest on all due and unpaid wages, as specified. (Labor Code §98.1)
- Upon filing of the ODA, requires the LC to:
- Serve a copy of the decision personally, by first-class mail, or in the manner specified in Section 415.20 of the Code of Civil Procedure on the parties.
- Advise the parties of their right to appeal the decision or award and further advise the parties that failure to do so within 10 days shall result in the decision or award becoming final and enforceable as a judgment by the superior court.
(Labor Code §98.1 and §98.2)
- Specifies that if no appeal of the ODA is filed within the period specified, the ODA shall, in the absence of fraud, be deemed the final order. Existing law then requires the LC to file, within 10 days of the ODA becoming final, a certified copy of the final order with the clerk of the superior court of the appropriate county unless a settlement has been reached by the parties and approved by the LC. Judgment shall be entered immediately by the court clerk in conformity therewith. (Labor Code §98.2)
- Provides that in case of willful failure by the judgment debtor to comply with a final judgment, the division or the judgment creditor may request the court to apply the sanctions provided in Section 708.170 of the Code of Civil Procedure including an order requiring a person to appear before the court. Failure to appear can result in a warrant to have the person brought before the court to answer for the failure to appear. (Labor Code §98.2)
- As an alternative to a judgment lien, upon the order becoming final, a lien on real property may be created by the LC recording a certificate of lien, for amounts due under the final order and in favor of the employee or employees named in the order, with the county recorder of any county in which the employer’s real property may be located, at the LC’s discretion and depending upon information the LC obtains concerning the employer’s assets. (Labor Code §98.2)
- Provides that, upon payment of the amount due under the final order, the LC shall issue a certificate of release, releasing the lien created per the above. Unless the lien is satisfied or released, a lien under this section shall continue until 10 years from the date of its creation.
(Labor Code §98.2)
- Requires the LC to make every reasonable effort to ensure that judgments are satisfied, including taking all appropriate legal action. (Labor Code §98.2)
- Authorizes, until January 1, 2029, a public prosecutor to prosecute an action, either civil or criminal, for a violation of certain provisions of the labor code or to enforce those provisions independently. (Lab. Code §181)
This bill:
- Revises the existing wage claim investigation process to specify that if the LC determines that no further action will be taken on an employee claim, then the LC shall, within 30 days of receipt of the complaint, notify the complainant of that determination. If the LC declines to continue to investigate, the claimant may pursue remedies through any alternative forum available, as specified.
- Specifies that if the LC does not make a determination that no further action will be taken, then the LC shall, within 60 days of receipt of the complaint, notify all parties against whom allegations have been made in the complaint, including the total amount of wages, penalties, and other demands due and the Labor Code sections under which the claimant asserts the defendant’s liability, as specified.
- Revises the requirements regarding the defendant’s response to a complaint to require, within 30 days of transmittal of the notice specified above, the defendant(s) to respond by either paying the full amount due as described in the notice or by filing an answer with the LC.
- Requires the defendant’s answer to, at a minimum, include both of the following:
- Whether the defendant admits to employing the complainant during any period alleged in the notice.
- If the defendant denies an employment relationship based on a worker’s classification as an independent contractor, the defendant shall provide facts to demonstrate that the classification meets the ABC test as required by state labor law.
- If the defendant denies an employment relationship for other reasons, the defendant shall name any and all known employers of the complainant or other parties potentially liable for the violations and shall include their contact information.
- Whether the defendant admits or denies owing any amount to the complainant.
- For any admission of an amount owed, authorizes the LC to issue an ODA for that amount and authorizes the ODA to be appealed pursuant to existing law.
- For any denial of liability for wages, penalties, and other demands for compensation alleged, the defendant shall set forth the particulars in which the employee complaint is inaccurate or incomplete and the facts upon which the defendant intends to rely.
- Whether the defendant admits to employing the complainant during any period alleged in the notice.
- Provides that if the defendant fails to provide an answer within 30 days of transmittal of the notice specified above, the LC shall issue an ODA in the amount stated in the notice. The ODA may be appealed pursuant to existing law.
- If the defendant provides an answer, but the answer does not meet the requirements specified above, the LC may provide the defendant with 15 additional days to submit a revised answer. After the 15 days, if the defendant fails to provide an answer as required, the LC shall issue an ODA in the amount stated in the notice which may be appealed.
- Authorizes the LC to request an answer from any new party added to the employee complaint at any point in the investigation by issuing a notice of claim to that employer within 60 days of the employer being added to the complaint.
- Provides that if the LC does not take any further action, as specified, the LC shall, within 30 days of the receipt of the response, notify all parties of the determination and authorizes a claimant to pursue remedies through any alternative forum available, as specified.
- If the LC does not make a determination on a claim, requires the LC to conduct an investigation of the employee complaint. The LC shall make an estimated appraisal of the amount of wages, damages, penalties, expenses, and other compensation owed and shall determine all the parties liable for the assessment. The investigation, assessment, and determination of liability shall be made within 90 days of the receipt of the defendant’s response and shall be made through the following process:
- The LC may decide to hold a mandatory investigatory and settlement conference upon providing notice of the conference to the parties.
- If the claimant fails to attend the conference, the employee complaint may be dismissed unless a claimant can provide a good cause reason for their nonappearance.
- If the defendant fails to attend the settlement conference and does not provide a good cause reason for their nonappearance, the LC may issue an ODA in the amount stated in the notice.
- Upon agreement of the claimant, the LC may hold additional mandatory investigatory and settlement conferences if additional defendants are identified during the investigation of the complaint.
- The LC may issue a subpoena to a defendant requesting copies of payroll records for the employee, as specified, during the claim period.
- The LC may decide to hold a mandatory investigatory and settlement conference upon providing notice of the conference to the parties.
- Revises the hearing timeline to require, within 90 days of the issuance of the formal complaint, as specified, the LC to set a hearing date and serve a copy of the formal complaint on all parties, along with a notice of the date, time, and place of the hearing. The LC is authorized to conduct the hearing in person, over the telephone, or via video conference.
- If a defendant fails to answer or appear at a hearing, authorizes the LC to issue an ODA in the amount stated in the formal complaint issued. The ODA is appealable pursuant to existing law.
- Provides that, if a defendant’s records are inaccurate or inadequate as to the precise extent of work completed and compensated by the claimant, the claimant has carried out their burden of proof if they prove that they have in fact performed work for which they were improperly compensated and produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.
- Regarding existing authority of the LC to grant relief to a defendant that fails to appear or answer to a complaint, specifies that the LC’s authority to grant relief terminates upon the defendant’s filing of an appeal.
- Specifies that the LC’s authority to investigate a claim or issue an ODA does not terminate upon the expiration of the deadlines set forth in these provisions.
- Specifies that a notice required to be given pursuant to these provisions shall be given by personal service, first-class mail, certified mail, registered mail, or by any manner that the party agrees to accept service, including, but not limited to, electronic service.
Administrative Fee:
- Requires that any ODA granted pursuant to these provisions shall also impose an administrative fee payable in the amount of 30 percent of the ODA. The administrative fee shall be deposited into the Wage Recovery Fund, which is created by this bill.
- Requires, upon appropriation by the Legislature for this express purpose, all money in the Wage Recovery Fund to be disbursed by the LC, as specified, only to persons determined by the LC to have been damaged by the failure of an employer to pay wages, penalties and other damages.
- Requires that any disbursed funds subsequently recovered by the LC from a liable party shall be returned to the fund, as specified.
- Requires the LC, upon request by a defendant at a hearing for a formal complaint, to waive any or all of the administrative fee, provided that all of the following are satisfied:
- The ODA issued under these provisions does not impose liability for penalties related to an employer’s willful failure to pay an employee upon termination or resignation.
- The defendant shall attest in writing that it:
- Does not have a prior ODA or judgment issued against them within the past 10 years for engaging in illegal conduct related to a wage dispute or other violations under the jurisdiction of the LC.
- Did not enter into a settlement agreement within the past 10 years concerning prior illegal conduct related to a wage dispute or other violations under the jurisdiction of the LC. Specifies that a payment made on owed wages does not constitute a settlement agreement for purposes of this provision.
Other provisions:
- Provides that if an appeal to an ODA is filed in superior court, the appeal is classified as an unlimited civil case. Specifies that a party seeking appeal is unsuccessful if they withdraw their appeal without a judgment. Adds to the grounds for an employee to be deemed successful, that the defendant voluntarily pays an amount greater than zero.
- Prohibits a court from consolidating an appeal filed under these provisions with any other action not arising out of, or related to, the wage claim covered by the underlying ODA absent an executed agreement in writing by all parties.
COMMENTS
1. Background
Data on Wage Theft:
California leads the nation with some of the strongest workplace protections for workers. Unfortunately, those laws are meaningless if they are not implemented or enforced, leaving workers struggling to recoup owed wages. Wage theft in California, which impacts low-wage workers disproportionately, is well documented. Wage theft captures many labor law violations including violations of the minimum wage, overtime, denied meal periods, or misclassification of employees as independent contractors, among others. A 2022 report to the Legislature on the state’s wage claim adjudication process reveals that there were nearly 19,000 wage claims filed in 2021 with a total of $335 million being owed to workers.[1] Due to challenges in staffing, resources, and a growing case backlog, only approximately $40 million has been in paid in awards or settlements through the wage claim adjudication unit of the LC.[2] In 2022, the Labor Commissioner’s office recovered through the wage claim process an average of 63 percent of wages owed, totaling more than $47 million paid to workers.
A 2024 Rutgers School of Management and Labor Relations report assessed minimum wage violations across four metropolitan statistical areas of interest – Los Angeles/Long Beach/Anaheim, San Jose/Sunnyvale/Santa Clara, San Diego/Carlsbad/San Marcos, and San Francisco/Oakland/Fremont.[3] Among the key findings of the report are the following:
- An average of $2.3 to $4.6 billion in earned wages were lost by workers each year from 2014 to 2023 due to minimum wage violations across these four metro areas.
- The majority of lost wages were in the Los Angeles area, where we estimate an average of $1.6 to $2.5 billion was lost a year during the study period.
- Those that were paid below the minimum wage lost roughly 20 percent of their total paycheck on average, or nearly $4,000 in earned wages a year if working full-time.
- The most impactful violations occurred in the San Francisco area, where workers lost an average of $4,300 to $4,900 annually to minimum wage violations.
- The number of workers paid below both the state and primary metro minimum wages has more than doubled since 2014, growing particularly dramatically over the most recent year of the study (2023).
Wage theft does not only affect workers, but it also creates unfair competition for responsible employers who follow the law. The State of California is also harmed when labor laws are not enforced because more workers fall into poverty, the safety net is eroded, and payroll taxes are not paid.
Existing Wage Theft Adjudication Process:
As noted under existing law, a worker may file a wage theft claim with the DLSE. The DLSE, also known as the LC’s office, is then tasked with resolving wage theft claims by investigating, facilitating a resolution with the worker and employee, and holding a hearing when necessary. In some cases, claims may go directly to civil litigation, skipping the settlement conference and hearing steps.
Once the LC issues an order, decision, or award (ODA), the employer has a limited time after service of the LC decision to file an appeal. If no appeal is filed within the specified period, the LC must file a certified copy of the decision with the appropriate Superior Court and obtain a judgment against the employer for the amount owed. When the LC does request that the court enter the judgment against the employer, the worker can choose the option of referring the judgment to the LC’s Enforcement Unit for collection or pursue collection on their own or through the use of an external partner, such as a private attorney or advocacy groups.
The DLSE Enforcement Unit can use a variety of means to collect judgment amounts, including levies against employers’ bank accounts and liens on properties. Additionally, DLSE calculates interest accrued on any outstanding judgment amounts for collection purposes.
Existing law prescribes specified number of days for each step in the wage theft adjudication process, with 135 days being the maximum number of days under which it is to be resolved. Below is the timeline under which the DLSE is required to respond to a wage theft claim:
- 30 days from claim submission to gather information and determine if a hearing is necessary OR to take no further action and notify relevent parties.
- Hold a hearing within 90 days of determination that a hearing is necessary.
- Within 15 days after the hearing is concluded, file an order, decision, or award.
- Within 10 days of service of an ODA, parties can appeal OR the LC files the ODA with the appropriate Superior Court and the court issues a judgment against the employer.
State Auditor Report on the Labor Commissioner’s Office:
In May 29, 2024, the California State Auditor released a report summarizing the findings of an audit of the Division of Labor Standards Enforcement. The State Auditor reviewed the backlog of wage claims submitted by workers from fiscal years 2017-18 through 2022-23, and determined that the LC is not providing timely adjudication of wage claims for workers primarily because of insufficient staffing to process those claims.[4] The backlog of grew from 22,000 at the end of fiscal year 2017–18 to 47,000 at the end of fiscal year 2022–23. As of November 1, 2023, more than 2,800 claims had been open for five years or more; these claims equated to more than $63.9 million in unpaid wages.
Among other things, the report found:
- The LC’s office often takes two years or longer to process wage claims, with a median of 854 days to issue a decision (more than six times longer than the law allows).
- Field offices have insufficient staffing to process wage claims with vacancy rates equal to or greater than 10 percent, and 13 field offices with vacancy rates greater than 30 percent. The Auditor estimates that the LC’s office needs hundreds of additional positions to resolve its backlog. Contributing to the high vacancy rate is an ineffective and lengthy hiring process and non-competitive salaries.
- The DLSE’s Enforcement Unit’s work results in only a small percentage of successful payment to workers. Between January 2018 and November 2023, about 28 percent of employers did not make LC‑ordered payments. The LC consequently obtained judgments against those employers. In roughly 24 percent of judgments during that time, or about 5,000 cases, the workers referred their judgments to the Enforcement Unit. The unit successfully collected the entire judgment amount in only 12 percent of those judgments, or in about 600 cases.
Legislative Response to State Auditor Findings:
In response to last year’s state audit of the LC, several bills were introduced this year to either go after unsatisfied judgments in more aggressive ways (SB 261 Wahab, SB 355 Perez, and SB 310 Wiener), deny licenses or permits to employers with owed judgments (AB 485 Ortega), or reform the way the LC responds to claims of unpaid wages (this bill). All bills are attempting to improve wage theft processing and collection to deliver owed wages to workers who desperately need them.
This bill:
This bill attempts to address the problems discussed above by reforming the wage claim adjudication process in order to give the LC more direction on the steps to take and the timelines to be followed. Although the bill sets for a modified timeline that does not differ too much from existing law, it does encourage employers to participate earlier in the process or risk the LC issuing a default judgment against them. Another key reform proposed by the bill is the change in the order of the settlement conferences. Currently, these settlement conferences may happen before the LC has determined whether or not to hold a hearing. This bill proposed that these settlement conferences occur, if at all, only after the LC has notified the employer of the complaint and given them the opportunity to respond.
A new element introduced with this bill is the idea of charging employers a 30 percent administrative fee on all ODAs granted by the LC. The fees collected would be used to pay workers owed wages. Given the length of time it takes for workers to get wage theft claims adjudicated and moneys recovered, if at all, this idea could help the State provide some relief to workers while their case is being processed. Any disbursed funds subsequently recovered by the LC from a liable party would be returned to the fund.
2. Committee Comments:
The bill imposes a 30 percent administrative fee on all ODAs granted by the LC, regardless of whether the employer participated or not. Opponents argue that this penalizes employers who exercise their right to a hearing, especially in cases where legitimate, good faith disputes exist and they are seeking a resolution to a genuine dispute.
To address these concerns, the author amended the bill to provide the LC discretion to waive the fee if the employer meets specified conditions. Opponents argue that, “practically speaking, this ‘waiver; will apply to no one. Virtually no employer will be able to attest that they have never settled any disagreement with an employee in the last ten years.” Should this administrative fee be limited to those employers that refuse to participate or attempt to resolve a dispute for wage theft? Should good employers that have engaged in the process, answered the LC’s request for information, and attended all required hearings and settlement conferences be charged the 30 percent administrative fee? Should the administrative fee be based on the degree or severity of the violations and be imposed at the LCs discretion?
Additionally, the provisions of the bill would go into effect January 1, 2026. However, it is unclear whether the bill’s provisions are intended to apply to existing claims – considering the backlog of wage theft claims currently at the LC’s office, the bill could potentially be implemented into those claims. For clarity and consistency, the author may wish to consider applying these new reforms to claims submitted to the LC on or after the effective date of this bill.
3. Need for this bill?
According to the author:
“Despite the best efforts of the LC and other enforcement agencies, state-level enforcement of labor law violations is inadequate. There are numerous barriers to enforcement even if agencies were well-funded, but instead, these agencies are underfunded and understaffed – both Cal/OSHA and the LC’s Office have vacancy rates above 30%.
Even when fully funded and staffed, there are millions of employers and workplaces in California and wage theft is pervasive. Enforcement agencies need more tools to make sure workers are paid for all the hours they work at the appropriate rate.
AB 1234 reduces the LC Office’s wage theft backlog by compelling employer participation in the process, thus avoiding unnecessary delays. It does this by permitting the entry of default judgment if a defendant fails to answer an employee’s complaint, attend a mandatory settlement conference without good cause, or appear at the hearing on the complaint. In addition, if an employer is found to have committed wage theft they must pay a 30 percent administrative fee (off of the award). An employer may request a waiver of this fee by attesting to: 1) having no prior wage judgments in the last 10 years and 2) having no “waiting time” violation in the current claim.
The measure also strengthens the procedural requirements for employers that challenge claims, including requiring documentation and evidence for disputes over claim amounts. These procedural enhancements will shorten the time it takes to resolve claims and help workers recover a greater percentage of the money owed to them.”
4. Proponent Arguments:
According to sponsors of the measure, the California Federation of Labor Unions, the Center for Workers’ Rights, and Bet Tzedek:
“Wage theft ends up costing workers billions of dollars in stolen wages. It puts law-abiding employers at a disadvantage and costs taxpayers in lost revenue. Wage theft has a disproportionate impact on disadvantaged and immigrant communities, increasing inequality. People of color, especially Black and Latino workers, are overrepresented in low-wage industries with higher rates of wage theft, including agriculture, construction, garment, and hospitality. Undocumented workers are three times more likely than U.S. born workers to experience wage violations. …
Current procedures for processing wage claims involve significant delays, often taking two or more years before a hearing is scheduled. Employers are not required to engage in the wage claim process and can fail to appear or respond to claims, refuse to communicate with the LCO, or otherwise deliberately delay the process leading to prolonged resolution times and hindering workers’ ability to recover unpaid wages.
AB 1234 puts in place procedures to reduce the backlog at the Labor Commissioner’s Office by focusing on employer failure to respond to wage theft claims that unnecessarily drag out cases. The bill requires the LCO to promptly notify employers when a worker files a wage claim and requires a full response in a reasonable amount of time. It allows the LCO to issue an Order, Decision, or Award (ODA) based on the worker’s claim if the employer fails to respond or appear, creating a disincentive for employers to delay or ignore the process. It also strengthens the procedural requirements for employers that challenge claims, including requiring documentation of specific facts and evidence for disputes over the amount of the claim. Lastly, this bill will clarify the appeals process to conform with current case law and provide for efficient processing of appeals to the wage claim.”
5. Opponent Arguments:
A coalition of employer organizations, including the California Chamber of Commerce, are opposed to the measure arguing that although they support the goal of expediting claims through the LC’s office, especially in circumstances where the employer does not take the claim seriously, they have some concerns about the proposed procedural changes and cannot support a new, automatic 30 percent penalty that would apply regardless of whether the defendant acted in good faith. They write:
Regarding the 30 percent administrative fee:
“AB 1234 imposes a thirty percent ‘administrative fee’ on every single order, decision, or award issued by the Labor Commissioner. This is a penalty by another name. It is an automatic thirty percent increase of whatever amount is found owed by the employer, which may already include penalties.
That penalty applies regardless of the type of violation, whether the violation was willful or not, whether the employer appeared at the hearing or not, whether penalties were already assessed under other provisions of the Labor Code, and regardless of the size of the employer…
Recent amendments do not address this concern. The language provides that the fee shall be waived where an employer establishes several criteria. However, those criteria include that 1) the employer has never settled any wage disagreement with an employee over the last ten years and 2) the employer has never received an adverse order from the Labor Commissioner within the last yen years, regardless of the circumstances or facts.
Practically speaking, this ‘waiver’ will apply to no one. Virtually no employer will be able to attest that they have never settled any disagreement with an employee in the last ten years. Any additional ‘fee’ should solely be tied to scenarios where an employer fails to comply with the wage claim process, which is the stated intent of the bill and aligns with the analysis from the Assembly Committee on the Judiciary:
. . . . the opponents raise an interesting point: The fee under this bill applies to all awards, regardless of whether or not the employer engaged in the process by answering in a timely manner and participating in any hearing or settlement conference. If the purpose of this bill is to encourage employers to engage in process, then the author may wish to consider if the 30% fee/penalty should be reserved for employers who refuse to participate or otherwise attempt to unreasonably delay the process. (page 6)”
Regarding the Informal Conference Timeline:
“Another concern with AB 1234 is that it would mandate a detailed answer be filed prior to the initial informal conference. Wage claims brought before the Labor Commissioner’s office are often filed by employees who, at least initially, are not represented by counsel. Consequently, the initial complaint may lack sufficient detail. The initial conference presents an opportunity for both parties to meet with the Labor Commissioner’s office (and often each other) to flesh out the claim. The Labor Commissioner’s office often helps the claimant add potential claims or requested penalties to the claim based on those conversations. If settlement is not reached, an answer then makes sense at that stage. Otherwise, to require the answer earlier will result in many answers simply stating the employer has insufficient knowledge to address the claim. At the very least, if the answer were required earlier, the law should allow for a general denial like in state court. The bill is also unclear about whether it applies to claims presently pending before the Labor Commissioner and how timing would work in those claims at various stages of the process.”
Regarding the LC entering judgments:
“Proposed section 98(a)(5) provides that if the defendant fails to submit an answer on time, the Labor Commissioner “shall” issue the ODA in the amount alleged due in the claim. Sections 98(d)(4) and (c)(1) provide that if the defendant fails to appear at the hearing or at the settlement conference, the Labor Commissioner ‘may’ issue the ODA in the amount alleged due in the claim.
Presently, if the defendant does not appear or answer on time, the Labor Commissioner may issue an ODA ‘in accordance with the evidence.’ That current law mirrors what happens in civil court where there is a default: the plaintiff must provide a declaration laying out the evidence after a default is issued. The court may then request a hearing if there are questions about the declaration prior to entering a default judgment. AB 1234 provides that the Labor Commissioner must enter ODA in the full amount requested even if there is no evidence other than the complaint where there is no answer, and that it can do the same if the defendant is not present at the conference or hearing. We believe that the Labor Commissioner, like the courts, should consider the evidence presented and have the right to request testimony or further evidence from the claimant. Otherwise, simply being late in filing an answer would automatically result in an ODA in the full amount claimed, regardless of whether the claimant was accurate or truthful. While we understand the goal of expediting claims against non-responsive employers, we believe the Labor Commissioner should be able to review the evidence and request further testimony, if needed, to ensure the allegations are accurate.”
Regarding consolidation and appeals being “unlimited”:
“Proposed section 98.2(f) provides that a court may not consolidate any action filed for appeal with any other action that does not arise out of the wage claim covered by the ODA. Courts should have discretion to manage their own dockets to enable the just and efficient resolution of cases. See, e.g., CRC Standard No. 2.1. If there is a situation in which consolidating one action with another would achieve those goals, the same rules as in other cases should apply. That principle also makes sense in conjunction with proposed 98.2(e), which says that the court shall have jurisdiction over claims not stated in the underlying wage claim.
Proposed section 98.2(a) provides that all appeals to the superior court shall be classified as an unlimited civil case. There are already thresholds surrounding when a case is classified as unlimited. If the amount in controversy does not exceed $25,000, the case is ‘limited’ because there is a streamlined judicial process for faster resolution. We believe whether a case is classified as unlimited or limited should fall under the same demand thresholds.
Proposed 98(f) provides that while a defendant may seek relief from the Labor Commissioner under Code of Civil Procedure section 473 (which allows defaults to be set aside), the power for the Labor Commissioner to grant that relief terminates if an appeal is filed. Parties only have ten days to appeal. A party would effectively always be forced to file for an appeal instead of waiting to see if the Labor Commissioner grants relief under section 473.
Proposed 98.2(b) would require every defendant appealing to post their own bond. So, if three defendants are jointly liable for $1,000, then a bond must be posted for $3,000 because each defendant needs to post a bond. Where two defendants are the same entity, (e.g., a company and a managing agent), this is a higher hurdle to be able to appeal.
Finally, we are concerned under proposed 98.2(c) that a ‘prevailing party’ for purposes of attorneys fees includes a scenario where the employer voluntarily chooses to settle the case.”
6. Double Referral:
This bill has been double referred and if approved by this Committee today, will be sent to Senate Judiciary for a hearing.
7. Prior/Related Legislation:
SB 261 (Wahab and Wiener, 2025) would 1) require the DLSE to post online information of employers with unsatisfied ODAs on a claim for unpaid wages; 2) prescribe when a posting can be removed; 3) subject, for final judgments unsatisfied after a period of 180 days, the employer to a civil penalty not to exceed three times the outstanding judgment amount; and 4) authorize the Labor Commissioner to adopt regulations to enforce these provisions. SB 261 is pending the Assembly Labor and Employment Committee.
SB 310 (Wiener, 2025) would permit the penalty for failure to pay wages owed to employees to be recovered through an independent civil action, as specified. SB 310 is currently on the Senate Inactive File.
SB 355 (Perez, 2025) would 1) require employers with unsatisfied judgments for owed wages to provide documentation to the LC that the judgment is fully satisfied or the judgment debtor entered into an agreement for the judgment to be paid in installments, as prescribed; 2) subjects the judgment debtor employer to a civil penalty for violations; and 3) requires the LC to notify the Tax Support Division of the Employment Development Department of unsatisfied judgments as a notice of potential tax fraud. SB 355 is pending in the Assembly Labor and Employment Committee.
AB 485 (Ortega, 2025) would require state agencies to deny a new license or permit, or the renewal of an existing license or permit, for employers that have outstanding wage theft judgments and have not obtained a surety bond or reached an accord with the affected employee to satisfy the judgment. AB 485 is pending before this Committee.
AB 1002 (Gabriel, 2025) would authorize the AG to bring a civil action for the temporary suspension or permanent revocation of a contractor’s license for failing to pay workers the full amount of wages they are entitled to, failing to pay a wage judgment or for being in violation of an injunction or court order regarding the payment of wages. AB 1002 is pending in the Senate Business, Professions and Economic Development Committee.
AB 594 (Maienschein, Chapter 659, Statutes of 2023), until January 1, 2029, clarified and expanded public prosecutors’ authority to enforce the violation of specified labor laws through civil or criminal actions without specific authorization from the DLSE.
SUPPORT
California Federation of Labor Unions, AFL-CIO (Co-Sponsors)
Center for Workers’ Rights (Co-Sponsor)
Bet Tzedek (Co-Sponsor)
American Federation of State, County and Municipal Employees, AFL-CIO
Asian Law Caucus
California Coalition for Worker Power
California Domestic Workers Coalition
California Employment Lawyers Association
California Farmworker Coalition
California Federation of Teachers, AFT, AFL-CIO
California Immigrant Policy Center
California Nurses Association
California Rural Legal Assistance Foundation
California Safety and Legislative Board of SMART – Transportation Division California State Association of Electrical Workers
California State Pipe Trades Council
Central California Environmental Justice Network
Central Coast Alliance United for a Sustainable Economy
Centro Binacional de Desarrollo Indigena Oaxaqueño
Centro Legal de la Raza
Chinese Progressive Association
CLEAN Carwash Worker Center
Community Legal Services in East Palo Alto
Employee Rights Center
Filipino Community Center
Garment Worker Center
Inland Empire Labor Council, AFL-CIO
Instituto De Educacion Popular Del Sur De California (IDEPSCA)
Los Angeles Alliance for a New Economy
Maintenance Cooperation Trust Fund
Mission Action
Mixteco/Indigena Community Organizing Project
North Valley Labor Federation
Pilipino Workers Center
Public Counsel
Santa Clara County Wage Theft Coalition
South of Market Community Action Network (SOMCAN)
Street Level Health Project
Sunita Jain Anti-Trafficking Initiative Loyola Law School
TODEC Legal Center
Western States Council of Sheet Metal Workers
Women's Employment Rights Clinic of Golden Gate University
Worksafe
OPPOSITION
Acclamation Insurance Management Services
Agricultural Council of California
Allied Managed Care
American Subcontractors Association of California
Anaheim Chamber of Commerce
Associated General Contractors of California
Associated General Contractors - San Diego Chapter
Brea Chamber of Commerce
California Alliance of Family Owned Businesses
California Apartment Association
California Association of Sheet Metal & Air Conditioning Contractors National
California Chamber of Commerce
California Farm Bureau
California Hotel & Lodging Association
California Landscape Contractors Association
California League of Food Producers
California Manufacturers & Technology Association
California Retailers Association
California State Council of the Society for Human Resource Management
California Trucking Association
Carlsbad Chamber of Commerce
Chino Valley Chamber of Commerce
Coalition of Small and Disabled Veteran Businesses
Colusa County Chamber of Commerce
Corona Chamber of Commerce
Elk Grove Chamber of Commerce
Flasher Barricade Association
Gateway Chambers Alliance
Glendora Chamber of Commerce
Greater Coachella Valley Chamber of Commerce
Greater High Desert Chamber of Commerce
Housing Contractors of California
LA Cañada Flintridge Chamber of Commerce
Lake Elsinore Valley Chamber of Commerce
Long Beach Area Chamber of Commerce
Murrieta/Wildomar Chamber of Commerce
National Federation of Independent Business
Newport Beach Chamber of Commerce
Norwalk Chamber of Commerce
Oceanside Chamber of Commerce
Orange County Business Council
Palos Verdes Peninsula Chamber of Commerce
Paso Robles and Templeton Chamber of Commerce
Rancho Cucamonga Chamber of Commerce
Rancho Mirage Chamber of Commerce
Roseville Area Chamber of Commerce
Santa Clarita Valley Chamber of Commerce
Simi Valley Chamber of Commerce
Society of Human Resources Management California
Southwest California Legislative Council
Torrance Area Chamber of Commerce
Tri-County Chamber Alliance
Valley Industry & Commerce Association
West Ventura County Business Alliance
Western Carwash Association
Western Electrical Contractors Association
Western Growers Association
Wine Institute
-- END --
Wage Claims Adjudication Unit Annual Report Pursuant to Labor Code Section 96.1, Calendar Year 2021, California Labor Commissioner’s Office, p. 15. ↑
Ibid. ↑
Daniel J. Galvin, Jake Barnes, Janice Fine, and Jenn Round. Wage Theft in California: Minimum Wage Violations, 2014-2023. (Rutgers School of Management and Labor Relations, May 2024) ↑
Auditor of the State of California (May 2024). The California Labor Commissioner’s Office: Inadequate Staffing and Poor Oversight Have Weakened Protections for Workers. (Report 2023-104) https://www.auditor.ca.gov/wp-content/uploads/2024/05/2023-104-Report.pdf ↑
ASSEMBLY THIRD READING
ATR Bill Id:AB 1234
Author:(Ortega)
As Amended Ver:May 23, 2025
Majority vote
SUMMARY
Clarifies and revises the steps the Labor Commissioner (LC) may take in the wage claim process to ensure participation by the parties by permitting the entry of default judgment if a defendant fails to answer an employee’s complaint, attend a mandatory settlement conference without good cause, or appear at the hearing on the complaint.
Major Provisions
- Amends the timeline of notification of an employee complaint to provide that within 60 days of receipt of the complaint, the LC shall notify all parties against which the employee complaint has been filed of the allegations asserted in the complaint, including the total amount of wages, penalties, and other demands for compensation alleged due.
- The notice shall also identify the Labor Code section under which the claimant asserts the defendant’s liability, as specified.
- Revises requirements regarding the defendant’s response to the complaint described in 1) to require within 30 days of transmittal of the notice, the defendant(s) to respond by either paying the full amount due as described in the notice or by filing an answer with the LC.
- Requires the response in 2) above to, at a minimum, include both of the following:
- Whether the defendant admits to employing the complainant during any period alleged in the notice.
- If the defendant denies an employment relationship based on a worker’s classification as an independent contractor, the defendant shall provide facts to demonstrate that the classification meets the ABC test as required by state labor law.
- Whether the defendant admits or denies owing any amount to the complainant.
- For any denial of liability for wages, penalties, and other demands for compensation alleged, the defendant shall set forth the particulars in which the employee complaint is inaccurate or incomplete and the facts upon which the defendant intends to rely.
- Whether the defendant admits to employing the complainant during any period alleged in the notice.
- Provides that if the defendant fails to provide an answer within 30 days of transmittal of the notice described in 1) above, the LC shall issue an order, decision, or award (ODA) in the amount stated in the notice. The ODA may be appealed, as specified.
- If the defendant provides an answer, but the answer does not meet the requirements in 3), the LC may provide the defendant with 15 additional days to submit a revised answer. After the 15 days, if the defendant fails to provide an answer within the requirements in 3), the LC shall issue an ODA in the amount stated in the notice which may be appealed.
- Provides that if the LC does not take any further action, as specified, the LC shall, within 30 days of the receipt of the response, notify all parties of the determination.
- Requires, if the LC does not make a determination pursuant to 5) above, the LC to conduct an investigation of the employee complaint. The LC shall make an estimated appraisal of the amount of wages, damages, penalties, expenses, and other compensation owed and shall determine all the parties liable for the assessment. The investigation, assessment, and determination of liability shall be made within 90 days of the receipt of the defendant’s response and shall be made through the following process:
- The LC may decide to hold a mandatory investigatory and settlement conference upon providing notice of the conference to the parties.
- If the claimant fails to attend the conference, the employee complaint may be dismissed unless a claimant can provide a good cause reason for their nonappearance.
- If the defendant fails to attend the settlement conference and does not provide a good cause reason for their nonappearance, the LC may issue an ODA in the amount stated in the notice.
- The LC may issue a subpoena to a defendant requesting copies of payroll records for the employee, as specified, during the claim period.
- The LC may decide to hold a mandatory investigatory and settlement conference upon providing notice of the conference to the parties.
- Revises the hearing timeline to require, within 90 days of the issuance of the formal complaint, as specified, the LC to set a hearing date and serve a copy of the formal complaint on all parties, along with a notice of the date, time, and place of the hearing.
- Authorizes the LC, if a defendant fails to appear, to issue an ODA in the amount stated in the formal complaint issued. The ODA is appealable, as specified.
- States that an ODA granted under this chapter shall impose an administrative fee payable in the amount of 30 percent of the ODA. The administrative fee shall be deposited into the Wage Recovery Fund, which is hereby created.
- Requires, upon appropriation by the Legislature for this express purpose, all money in the Wage Recovery Fund to be disbursed by the LC only to persons determined by the LC to have been damaged by the failure to pay wages, penalties and other damages.
- Authorizes, upon request by a defendant at a hearing held pursuant to 7) above, the LC to waive any or all of the administrative fee, provided that all of the following are satisfied:
- The ODA issued under these provisions does not impose liability for penalties related to an employer’s willful failure to pay an employee upon termination or resignation.
- The defendant shall attest in writing that it:
- Does not have a prior ODA or judgment issued against them for engaging in illegal conduct related to a wage dispute or other violations under the jurisdiction of the LC.
- Did not enter into a settlement agreement concerning prior illegal conduct related to a wage dispute or other violations under the jurisdiction of the LC.
- Adds that if an appeal is filed in superior court, the appeal is classified as an unlimited civil case.
- Provides that a party seeking appeal is unsuccessful if they withdraw their appeal without a judgment. Adds to the grounds for an employee to be deemed successful, that the defendant voluntarily pays an amount greater than zero.
- Prohibits a court from consolidating an appeal filed under this section with any other action not arising out of, or related to, the wage claim covered by the underlying ODA absent an executed agreement in writing by all parties.
COMMENTS
California's Office of the LC is charged with, among other things, adjudicating worker wage claims. Wage claims can cover a number of issues, including, unpaid overtime, missed meal and rest periods, or the failure to pay wages. The LC is statutorily required to determine whether a wage claim needs a hearing within 30 days of receiving the claim. In addition, the LC has 90 days to hold a hearing from making that determination and 15 days from the hearing to issue a decision.
Unfortunately, the reality is that workers' claims generally take two years or longer to go through the adjudicatory process.[1] Contributing factors to this lengthy timeline are high vacancy rates, low salaries, and an enormous backlog of cases (47,000 in 2023-2024).[2] Due to this significant lag in resolution, workers who prevail in their cases are receiving pennies on the dollar compared to their claim amount. In fact, only 12 percent of workers using the LC’s enforcement process receive their full award.[3] For low-wage workers in particular, partial awards are not coming close to meeting their financial needs and obligations.
According to the Author
According to the author, "The LC wage claim process is broken. It involves significant delays, often taking two or more years before a first hearing is scheduled. Employers are not required to engage and can fail to appear or respond to claims, dragging out the process and hindering workers' ability to recover unpaid wages.
AB 1234 reduces the LC Office's wage theft backlog by compelling employer participation in the process, thus avoiding unnecessary delays. It also strengthens the procedural requirements for employers that challenge claims, including requiring documentation and evidence for disputes over claim amounts. These procedural enhancements will shorten the time it takes to resolve claims and help workers recover a greater percentage of the money owed to them."
Arguments in Support
The Center for Workers' Rights, California Federation of Labor Unions, and Bet Tzedek, sponsors of the bill, state, "Wage theft ends up costing workers billions of dollars in stolen wages. It puts law-abiding employers at a disadvantage and costs taxpayers in lost revenue. Wage theft has a disproportionate impact on disadvantaged and immigrant communities, increasing inequality. People of color, especially Black and Latino workers, are overrepresented in low-wage industries with higher rates of wage theft, including agriculture, construction, garment, and hospitality. Undocumented workers are three times more likely than U.S. born workers to experience wage violations.
Despite the best efforts of the Labor Commissioner and other enforcement agencies, state-level enforcement of labor law violations is inadequate. The agencies are underfunded and understaffed with the vacancy rate at the Labor Commissioner's Office (LCO) above 30%. Even when fully funded and staffed, there are millions of employers and workplaces in California, and wage theft is pervasive."
Arguments in Opposition
A coalition of employer organizations, including the California Chamber of Commerce, are opposed and state, AB 1234 "would mandate a detailed answer be filed prior to the initial informal conference. Wage claims brought before the Labor Commissioner’s office are often filed by employees who, at least initially, are not represented by counsel. Consequently, the initial complaint may lack sufficient detail. The initial conference presents an opportunity for both parties to meet with the Labor Commissioner's office (and often each other) to flesh out the claim. The Labor Commissioner's office often helps the claimant add potential claims or requested penalties to the claim based on those conversations. If settlement is not reached, an answer then makes sense at that stage. Otherwise, to require the answer earlier will result in many answers simply stating the employer has insufficient knowledge to address the claim. The bill is also unclear about whether it applies to claims presently pending before the Labor Commissioner and how timing would work in those claims at various stages of the process."
FISCAL COMMENTS
According to the Assembly Appropriations Committee:
- Costs of an unknown, but likely significant amount, in excess of $150,000, to the LC to revise its wage claim process, potentially offset by cost savings of an unknown amount from increased administrative efficiencies and reduced delays within the wage claim process (Labor Enforcement and Compliance Fund).
- Annual cost pressures (General Fund (GF) or Trial Court Trust Fund) of an unknown amount, potentially up to $150,000, to the courts in additional workload by classifying the appeal of the LC’s ODA as an unlimited civil case. Additionally, this bill modifies the LC’s wage claim process in a manner that lowers the threshold for issuing an ODA against an employer, which may lead to an increased number of ODA appeals. It is unclear how many actions may be filed statewide, but the estimated workload cost of one hour of court time is $1,000. Although courts are not funded on the basis of workload, increased pressure on staff and the TCTF may create a need for increased court funding from the GF to perform existing duties. The Budget Act of 2024 included $37.3 million ongoing GF to backfill declining TCTF revenue.
VOTES
ASM LABOR AND EMPLOYMENT: 4-0-3
YES: Ortega, Kalra, Lee, Ward
ABS, ABST OR NV: Flora, Chen, Elhawary
ASM JUDICIARY: 8-2-2
YES: Kalra, Bauer-Kahan, Bryan, Connolly, Harabedian, Lee, Stefani, Zbur
NO: Dixon, Macedo
ABS, ABST OR NV: Pacheco, Sanchez
ASM APPROPRIATIONS: 11-1-3
YES: Wicks, Arambula, Calderon, Caloza, Elhawary, Fong, Mark González, Hart, Pacheco, Pellerin, Solache
NO: Tangipa
ABS, ABST OR NV: Sanchez, Dixon, Ta
UPDATED
VERSION: May 23, 2025
CONSULTANT: Megan Lane / L. & E. / (916) 319-2091 FN: 0000772
Date of Hearing: May 7, 2025
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Buffy Wicks, Chair
ABPCA Bill Id:AB 1234
Author:(Ortega) – As Amended Ver:April 23, 2025
Policy Committee: | Labor and Employment | Vote: | 4 - 0 |
Judiciary | 8 - 2 | ||
|
|
Urgency: No State Mandated Local Program: No Reimbursable: No
SUMMARY:
This bill modifies the Labor Commissioner’s (LC’s) wage claim process to allow an entry of default judgment if an employer fails to respond within a certain time frame and impose an additional administrative fee on the amount owed by an employer.
Specifically, this bill:
- Revises timelines for the LC to notify parties of an employee complaint and for the defendant to respond. The LC must notify a complainant within 30 days of receipt of the complaint if the LC determines no further action will be taken. Otherwise, within 60 days of receipt of the complaint, the LC must notify all parties against which the employee complaint has been filed of the allegations, including the monetary value of wages and penalties owed. Within 30 days of transmittal of this notice, the defendants must respond by either paying the full amount due or filing an answer with the LC containing certain information. If the defendant fails to file the answer, the LC must issue an order, decision, or award (ODA) for the owed amount.
- Requires, if the LC decides to prosecute a complaint, the LC to conduct an investigation, make a determination of liability within 90 days of receipt of the above-described answer, and issue a formal complaint. The LC may hold a mandatory investigatory and settlement conference and dismiss the complaint if the claimant fails to attend or issue an ODA if the defendant fails to attend.
- Requires the LC, within 90 days of issuing a formal complaint, to set a hearing date and serve a copy of the formal complaint and hearing notice to all parties. If the defendant fails to appear, the LC may issue an ODA in the amount stated in the formal complaint, which must be filed within 15 days.
- Provides that the LC’s authority to investigate a claim or issue an ODA does not terminate upon the expiration of these specified deadlines.
- Imposes an administrative fee payable in the amount of 30% of an ODA. The fee must be deposited into a new Wage Recovery Fund (Fund), with moneys disbursed, upon appropriation, by the LC to persons the LC determines have been damaged by wage theft. If disbursed funds are subsequently recovered by the LC from a liable party, the disbursed funds must be returned to the Fund.
- Classifies an appeal filed in superior court relating to the LC’s ODA as an unlimited civil case. The court has jurisdiction over the entire wage dispute, including related wage claims not raised in the front of the LC, but is prohibited from consolidating the action with any other actions not related to the underlying order.
FISCAL EFFECT:
- Costs of an unknown, but likely significant amount, in excess of $150,000, to the LC to revise its wage claim process, potentially offset by cost savings of an unknown amount from increased administrative efficiencies and reduced delays within the wage claim process (Labor Enforcement and Compliance Fund).
- Annual cost pressures (General Fund (GF) or Trial Court Trust Fund) of an unknown amount, potentially up to $150,000, to the courts in additional workload by classifying the appeal of the LC’s ODA as an unlimited civil case. Additionally, this bill modifies the LC’s wage claim process in a manner that lowers the threshold for issuing an ODA against an employer, which may lead to an increased number of ODA appeals. It is unclear how many actions may be filed statewide, but the estimated workload cost of one hour of court time is $1,000. Although courts are not funded on the basis of workload, increased pressure on staff and the TCTF may create a need for increased court funding from the GF to perform existing duties. The Budget Act of 2024 included $37.3 million ongoing GF to backfill declining TCTF revenue.
COMMENTS:
- Purpose. According to the author:
The LC wage claim process is broken. It involves significant delays, often taking two or more years before a first hearing is scheduled. Employers are not required to engage and can fail to appear or respond to claims, dragging out the process and hindering workers’ ability to recover unpaid wages.
AB 1234 reduces the LC Office’s wage theft backlog by compelling employer participation in the process, thus avoiding unnecessary delays. It also strengthens the procedural requirements for employers that challenge claims, including requiring documentation and evidence for disputes over claim amounts. These procedural enhancements will shorten the time it takes to resolve claims and help workers recover a greater percentage of the money owed to them.
- Background. Wage Theft. A May 2024 study by the Rutgers School of Management and Labor Relations found that California workers lose more than $2.3 billion to $4.6 billion each year due to wage theft. In California, a worker may bring a claim against an employer for unpaid wages through the LC or a civil court action. However, even when a worker prevails in a wage theft claim, the worker is often not successful in recovering the stolen money. A 2020 Legislative Analyst’s Office report found that less than half of workers awarded unpaid wages were able to collect any amount of the award from the employer.
LC Wage Claim Process. Existing law establishes a timeline for the LC to receive, investigate, hear, and adjudicate employee complaints of wage theft. This bill revises the wage claim process, most notably by permitting an entry of default judgment through the issuance of an ODA in the amount of the employee’s claim if the employer fails to answer or appear at various junctions in the process, thus creating an incentive for the employer to participate early in the process. Additionally, this bill requires an employer to pay an additional administrative fee equal to 30% of the ODA. However, as noted in the Assembly Judiciary Committee’s analysis of this bill:
The fee under this bill applies to all awards, regardless of whether or not the employer engaged in the process by answering in a timely manner and participating in any hearing or settlement conference. If the purpose of this bill is to encourage employers to engage in process, then the author may wish to consider if the 30% fee/penalty should be reserved for employers who refuse to participate or otherwise attempt to unreasonably delay the process.
- Support and Opposition. This bill is co-sponsored by the California Federation of Labor Unions, Center for Workers’ Rights, and Bet Tzedek Legal Services, which argue, “AB 1234 puts in place procedures to reduce the backlog at the [LC’s] Office by focusing on employer failure to respond to wage theft claims that unnecessarily drag out cases.” This bill is also supported by numerous other labor organizations and civil rights and workers’ rights groups.
This bill is opposed by a large coalition of employer groups led by the California Chamber of Commerce, which argues this bill “penalizes defendants for exercising their right to a hearing on the merits” and imposes “a new, automatic thirty percent penalty that would apply regardless of whether the defendant acted in good faith.”
Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081
Date of Hearing: April 22, 2025
ASSEMBLY COMMITTEE ON JUDICIARY
Ash Kalra, Chair
ABPCA Bill Id:AB 1234
Author:(Ortega) – As Introduced Ver:February 21, 2025
As Proposed to be Amended
SUBJECT: Employment: nonpayment of wages: complaints
KEY ISSUE: should the labor commissioner’s wage claim process be modified to encourage early participation by employers, largely by permitting entry of default judgements and imposing an additional administrative fee equal to 30% of the order, decision, or award?
SYNOPSIS
“Wage theft” refers to any failure of an employer to pay employees the wages to which they are legally entitled; it can take several forms, including failing to pay minimum wage, not paying overtime, failing to pay promptly, or making unlawful deductions. A worker who has experienced wage theft may file a complaint with the Labor Commissioner (LC), which is empowered to investigate the claim and determine what wages, if any, are owed. Existing law establishes a timeline for the LC to receive, investigate, hear, and adjudicate employee complaints of wage and hour violations. Any person who is found to have violated wage and hour laws is subject to a civil penalty, as specified.
According to the author and sponsors, the existing process is often delayed, at least in part, because employers fail to answer or appear, or otherwise delay the process by their refusal to engage. As such, this bill revises the wage complaint process, largely by permitting entry of default judgments to grant the employee’s claim if the employer fails to answer or appear. In addition, the bill would require the employer to pay an additional administrative fee equal to 30% of amount awarded by the LC; the fee would be deposited into a Wage Recovery Fund created by the bill.
This bill recently passed out of the Assembly Labor Committee on a 4-0 vote, with three members not voting. It is co-sponsored by Bet Tzedek, the California Federation of Labor Unions, and the Center for Workers’ Rights. It is supported by dozens of other labor, immigrant rights, and social justice groups, who contend that the bill is needed to force employers to participate in the wage claim process and thereby avoid backlogs and delays. The bill is opposed by an equally large number of business and employer groups, who express concerns about the changes made in the existing procedure and are especially opposed to the 30% administrative fee, which they deem a “penalty” rather than a fee.
The author will take amendments in this Committee to better clarify proposed new timelines. Those amendments are reflected in the summary and discussed in the analysis. However, the amendments do not appear to address the primary issues raised by the opposition.
SUMMARY: Revises the steps the Labor Commissioner (LC) may take in the wage claim process and permits the entry of a default judgment if a defendant fails to answer an employee’s complaint, attend a mandatory settlement conference without good cause, or appear at the hearing on the complaint. Specifically, this bill:
- Provides that if the LC determines that no further action will be taken on an employee complaint, then the LC shall, within 30 days of receipt of the complaint, notify the complainant of that determination. If the LC declines to take action, the claimant may bring an action in court, as specified. If the LC does determine that further action will be taken, then the LC shall, within 60 days of receipt of the complaint, notify all parties against whom allegations have been made in the complaint, including the total amount of wages, penalties, and other demands due.
- Requires the defendant to respond to the complaint within 30 days of transmittal of the notice require in 1) above. Specifies that the defendant may respond by either paying the full amount due or by filing an answer with the LC. Requires the answer, to, at a minimum, include both of the following:
- Whether the defendant admits to employing the complainant during any period alleged in the notice.
- Whether the defendant admits or denies owing any amount to the complainant.
- Provides that if the defendant fails to provide an answer within 30 days of transmittal of the notice, the LC shall issue an order, decision, or award (ODA) in the amount stated in the notice. If the defendant provides an answer, but the answer does not meet the requirements, the LC may provide the defendant with 15 additional days to submit a revised answer. After the 15 days, if the defendant fails to provide an answer as required, the LC shall issue an ODA in the amount stated in the notice.
- Provides that if the LC prosecutes the action for collection of wages, penalties, and demands pursuant to Labor Code Section 98.3, or if the LC determines that no further action will be taken on the complaint, the LC shall, within 30 days of receipt of the answer, notify all parties of its determination.
- If the LC does not make a determination pursuant to 4) above, the LC shall conduct an investigation of the complaint, make an assessment of any amount owed, and determine all parties liable for the assessment. Specifies that the investigation, assessment, and determination must be made within 90 days of receipt of the employer’s answer and shall be made through the following process:
- The LC may decide to hold a mandatory investigatory and settlement conference upon providing notice of the conference to the parties. If the claimant fails to attend the conference, the employee complaint may be dismissed unless a claimant can provide a good cause reason for their nonappearance. If the defendant fails to attend the settlement conference and does not provide a good cause for their nonappearance, the LC may issue an ODA in the amount stated in the notice.
- The LC may issue a subpoena to a defendant requesting copies of payroll records for the employee, as specified, during the claim period. The LC may also issue a subpoena for all records required to be maintained by the relevant wage order, and to any other parties or for any other information as determined by the LC.
- The LC shall issue a formal complaint that includes the allegations of the complaint and the parties liable and the amount of the compensation requested. Within 90 days of the issuance of this formal complaint, the LC shall set a hearing date and serve a copy of the formal complaint on all parties, along with a notice of the date, time, and place of the hearing.
- Authorizes the LC, if the defendant fails to answer or appear at hearing, to file in the office of the Division of Labor Standards Enforcement (DLSE) a copy of the ODA. Provides that the ODA shall also include the amount of interest accrued and the reasons for the decision.
- States that any award granted under this chapter shall also impose an administrative fee payable in the amount of 30 percent of the ODA. The administrative fee shall be deposited into the Wage Recovery Fund, which is created by this bill.
- Requires, upon appropriation by the Legislature, that money in the Wage Recovery Fund shall be disbursed by the LC to persons who have been damaged by the failure to pay wages and for other penalties by an employer. Any disbursement will be made pursuant to a claim for recovery from the fund in accordance with procedures developed by the LC.
- Provides that if an appeal is filed in superior court, the appeal is classified as an unlimited civil case. Specifies that a party seeking appeal is unsuccessful if they withdraw their appeal without a judgment.
- Prohibits a court from consolidating an appeal filed under this section with any other action not arising out of, or related to, the wage claim covered by the underlying ODA absent an executed agreement in writing by all parties.
EXISTING LAW:
- Authorizes the LC to investigate employee complaints. The LC may provide for a hearing in any action to recover wages, penalties, and other demands for compensation, including liquidated damages, as specified, properly before the DLSE or the LC, including orders of the Industrial Welfare Commission, and shall determine all matters arising under their jurisdiction. (Labor Code Section 98 (a). Subsequent citations refer to this code.)
- Requires, if the determination is made by the LC to hold a hearing, the hearing shall be held within 90 days of the date of that determination. (Section 98 (a).)
- Requires, when a hearing is set, a copy of the complaint, which shall include the amount of compensation requested, together with a notice of time and place of the hearing, to be served on all parties, personally or by certified mail, or in another manner, as specified. (Section 98 (b).)
- Authorizes, within 10 days after service of the notice and the complaint, a defendant to file an answer with the LC in any form as the LC may prescribe, setting forth the particulars in which the complaint is inaccurate or incomplete and the facts upon which the defendant intends to rely. (Section 98 (c).)
- Provides that if the defendant fails to appear or answer within the time allowed under these provisions, no default shall be taken against him or her, but the LC shall hear the evidence offered and shall issue an ODA in accordance with the evidence. (Section 98 (f).)
- Requires, within 15 days after the hearing is concluded, the LC to file in the office of the DLSE a copy of the ODA. The LC shall serve a copy of the decision personally, by first-class mail, or in another manner, as specified. (Section 98.1 (a).)
- Permits, within 10 days after service of notice of an ODA the parties to seek review by filing an appeal to the superior court, where the appeal shall be heard de novo. (Section 98.2 (a).)
FISCAL EFFECT: As currently in print this bill is keyed fiscal.
COMMENTS: According to the author, “The Labor Commissioner’s (LC) wage claim process is broken. It involves significant delays, often taking two or more years before a first hearing is scheduled. Employers are not required to engage and can fail to appear or respond to claims, dragging out the process and hindering workers’ ability to recover unpaid wages. AB 1234 reduces the LC Office’s wage theft backlog by compelling employer participation in the process, thus avoiding unnecessary delays. It also strengthens the procedural requirements for employers that challenge claims, including requiring documentation and evidence for disputes over claim amounts. These procedural enhancements will shorten the time it takes to resolve claims and help workers recover a greater percentage of the money owed to them.”
The problem of wage theft. Wage theft refers to any failure on the part of an employer to pay employees the wages to which they are legally entitled. Wage theft can take several forms, including failing to pay minimum wage, not paying overtime, failing to pay promptly, or making unlawful deductions from the employee’s pay. Wage theft remains shockingly prevalent in California notwithstanding repeated legislative efforts to combat the problem. A 2024 study conducted by the Workplace Justice Lab at Rutgers University School of Management found that “an average of $2.3 to $4.6 billion in earned wages were lost by workers each year from 2014 to 2023 due to minimum wage violations” across California’s four major metropolitan areas: Los Angeles, San Francisco, Oakland, and San Jose. The study also found that wage theft was concentrated in certain industries and occupations, and that wage theft disproportionately affects workers who are already paid lower than average wages. Wage theft is not gender- or color-blind, disproportionately affecting women, immigrants, and workers of color. (See Daniel J. Galvin, Jake Barnes, Janice Fine, and Jenn Round, Wage Theft in California: Minimum Wage Violations, 2014-2023, Workplace Justice Lab, Rutgers University School of Management and Labor Relations, May 2024.)
The Labor Commissioner’s current complaint process and timeline. The wage claim process starts when a worker who has experienced wage theft files a complaint with the LC. The complaint identifies the employer who allegedly committed the violation, the type of business, and the claimed wage theft amount. Since December of 2021, the LC allows the worker to file the claim online. The time between the filing of the claim and the LC’s final order, decision, or award (ODA) is supposed to occur within a maximum of 135 days. During the first 30 days after the claim is filed, a deputy commissioner is assigned and gathers information to determine whether the LC will take further action on the claim. During this period the deputy may attempt to facilitate a resolution or hold a settlement conference with the worker and the employer. Within 30 days of the filing of the complaint, assuming no resolution has occurred, the LC must notify the parties as to whether a hearing will be held or whether no further action will be taken on the complaint. If the LC determines that a hearing is necessary, the hearing must be held within 90 days of the date of that determination. Within 15 days after the hearing, the LC must file its ODA. However, while the LC is supposed to file an ODA within 135 days (30+20+15 above), a report by the California State Auditor found that the LC “took a median time of 854 days to issue a decision, more than six times longer than the statute allows.” (California State Auditor, The California Labor Commissioner’s Office: Inadequate Staffing and Poor Oversight Have Weakened Protection for Workers, Report 2023-104, May 2024, p. 10.)
While the State Auditor attributed these delays primarily to inadequate staffing and other factors internal to the LC, the author of this bill suggests that at least some of the delay in getting workers the wages they deserve is a result of the failure of employers to engage in the process, whether by failing to answer complaints, not showing up at settlement conferences or hearings, or otherwise not engaging in the process. As such, this bill revises the wage complaint process, both by attempting to streamline the timelines and, perhaps even more importantly, by permitting entry of default judgments that grant the employee’s claim if the employer fails to respond.
The timeline under this bill would generally work as follows. If the LC determines that no action will be taken on the complaint, the LC must notify the employee of this fact within 30 days of receipt of the complaint. If the LC will take no further action, the employee may seek relief in court. If the LC does determine that some action will be taken, the LC must within 60 days notify the employer that a complaint has been filed against them and the notice must state the total amount that is allegedly due. Within 30 days of receipt of this notice, the employer must respond by either (1) paying amount due or (2) filing an answer with the LC that admits or denies the allegations. If the employer simply fails to provide an answer within 30 days, the LC shall file an ODA in the amount of the notice. If an answer is filed, the LC must make its investigation, assessment, and determination of liability within 90 days of receipt of the answer. As part of this determination process, the LC may hold a mandatory settlement conference. If the employee fails to attend the conference, the complaint will be dismissed. If the employer fails to attend, the LC may issue an ODA in the amount set forth in the notice.
Change in default judgments and consideration of evidence. In sum, this bill sets forth a modified timeline that differs in many particulars from the existing timeline. However, while the new timelines do not greatly alter the total time from complaint to ODA, it does create incentives for the employer to participate early on by its use of default judgments. For example, if the employer fails to respond within 30 days of receiving the initial notice, the LC is required to file an ODA in the amount of the complaint and notice. Also, if the employer does provide an initial answer, but then fails to attend a hearing or mandatory settlement conference, the LC must file an ODA in the amount of the complaint and notice.
As the opponents of this bill point out, however, under existing law, if the defendant does not answer or appear, the LC must still consider the evidence provided rather than simply grant the amount alleged in the claim and notice. Specifically, existing Labor Code Section 98(f) states: “If the defendant fails to appear or answer within the time allowed under this chapter, no default shall be taken against him or her, but the Labor Commissioner shall hear the evidence offered and shall issue an order, decision, or award in accordance with the evidence.” Opponents contend that the same rule should apply under this bill, so that the LC shall base the ODA on the evidence presented rather than the amount claimed.
Change in the order of the settlement conference. Another important change between this bill and existing law concerns the timing of the settlement conference. Under the existing law, the settlement conference would typically be held early on, even before the LC determines whether or not to hold a hearing. However, under this bill, the settlement conference occurs, if at all, only after the LC had notified the employer of the complaint and the employer has answered. According to the opponents, this does not provide the employer with sufficient information to provide a meaningful answer because, they claim, unrepresented employees may not always include all of the relevant information. However, the early settlement conference not only provides an opportunity for the two sides to come to a resolution, it provides the employer with the information needed to prepare a more thorough answer.
“Administrative fee” or “penalty”? Finally, in addition to modifying the procedures and timelines for the wage claim process, this bill would impose upon the employer who is found to have committed wage theft an “administrative fee” equal to 30% of the total amount of the ODA. The money raised from this fee would be deposited into a “Wage Recovery Fund” created by this bill. The bill would authorize the fund, upon appropriation, to be used to compensate the Labor Commissioner for the staffing required to investigate and recover wages and penalties owed to aggrieved employees.
According to the opponents, this “fee” is “a penalty by another name,” because it is an automatic increase on the amount of the ODA as determined by the LC, and that amount may include not only the wages owed with interest, but also any other costs or penalties that have been imposed. The opponents contend that this “penalty” will be imposed even if the employer was simply exercising their right to a hearing, had a good faith belief that they had not violated any wage laws, answered in a timely manner, and participated in any conference or hearing.
The opponents may overstate the extent to which this is a “penalty” as opposed to a fee that helps the underfunded and understaffed LC recover wages for aggrieved employees. Having said that, the opponents raise an interesting point: The fee under this bill applies to all awards, regardless of whether or not the employer engaged in the process by answering in a timely manner and participating in any hearing or settlement conference. If the purpose of this bill is to encourage employers to engage in process, then the author may wish to consider if the 30% fee/penalty should be reserved for employers who refuse to participate or otherwise attempt to unreasonably delay the process.
Proposed author amendments: The author will take the following amendments in this Committee. For the most part, these clarify timelines, though the final amendment alters how the money in the Wage Recovery Fund will be dispersed.
- On page 4, between lines 3 and 4 insert:
(2) If the Labor Commissioner determines that no further action will be taken on the employee complaint, the Labor Commissioner shall, within 30 days of the receipt of an employee complaint, notify the complainant of the determination. If the Labor Commissioner declines to continue to investigate an employee complaint, the claimant may pursue remedies through any alternative forum available with the tolling of the statute of limitations based on the date the employee complaint was made, so long as the subsequent action is commenced within one year of the date the notice was provided pursuant to this subdivision.
- On page 4, in line 4, strike out “(2)Within” and insert:
(3) If the Labor Commissioner does not make a determination pursuant to paragraph (2) that no further action will be taken, the Labor Commissioner, shall, within
- On page 4, in lines 4 and 5, strike out “the Labor Commissioner shall” and in line 12 insert:
The notice shall identify the Labor Code section under which the claimant asserts the defendant’s liability if it is ascertainable from the employee’s complaint or if it is ascertainable from other available information within the time period allowed.
- On page 4 to 5 make corresponding numbering changes.
- On page 5, strike out line 18 and insert:
investigation by issuing a notice of claim to that employer within 60 days of the employer being added to the employee complaint. The notice of claim shall include the information specified in paragraph (3). The employer’s response to the notice of claim shall be governed by paragraphs (4) and (5).
- On page 5, in line 33, strike out “assessment” and insert estimated appraisal
- On pages 5 to 6 make corresponding numbering changes
- On page 6, in line 24, after the first “the” insert:
allegations in the employee complaint concerning the and after the second comma insert: and all parties liable, and
- On page 6, in line 32, after the period insert:
The Labor Commissioner may conduct the hearing in person, over the telephone or via video conference
- On page 7, between lines 19 and 20, insert:
(5) If a defendant’s records are inaccurate or inadequate as to the precise extent of work completed and compensated by the claimant, the claimant has carried out their burden of proof if they prove that they have in fact performed work for which they were improperly compensated and produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.
- On page 9, in line 16, after the period insert:
An order, decision, or award issued under this section shall be deemed a determination of the defendant’s liability for the unpaid wages specified in the order, decision, or award.
- On page, in line 28, strike out “available” and lines 29 to 31 and insert:
disbursed by the Labor Commissioner only to persons determined by the Labor Commissioner to have been damaged by the failure to pay wages and penalties and for other damages by an employer.
(3) Any disbursement shall be made pursuant to a claim for recovery from the fund in accordance with procedures prescribed by the Labor Commissioner.
(4) Any disbursed funds subsequently recovered by the Labor Commissioner from a liable party pursuant to an assignment of the claim to the Labor Commissioner for recovery of due amounts shall be returned to the fund.
ARGUMENTS IN SUPPORT: The California Federation of Labor Unions, the Center for Workers Rights, and Bet Tzedek (the co-sponsors) argue that AB 1234 “will improve the efficiency and effectiveness of the Labor Commissioner wage-claim process to reduce the backlog of claims.” The bill will do this, the co-sponsors maintain, by promote early “employer participation and timely responses to claims to discourage employers from delaying or challenging valid claims without merit and to encourage compliance with wage and hour laws.” The co-sponsors claim that, despite the best efforts of the understaffed Labor Commissioner’s office, the existing process for processing wage claims “involve significant delays, often taking two or more years before a hearing is scheduled. Employers are not required to engage in the wage claim process and can fail to appear or respond to claims, refuse to communicate with the LCO, or otherwise deliberately delay the process leading to prolonged resolution times and hindering workers’ ability to recover unpaid wages.”
The co-sponsors believe that AB 1234 will address these employer-driven delays by “focusing on employer failure to respond to wage theft claims that unnecessarily drag out cases.” The co-sponsors point, in particular, to the provisions in the bill that require the Labor Commissioner to respond in a reasonable amount of time; allow the Labor Commissioner to issue orders and awards based on the worker’s claim if the employer fails to respond or appear, and effectively “creating a disincentive for employers to delay or ignore the process.”
ARGUMENTS IN OPPOSITION: The bill is opposed by a large coalition of business and employer groups who have “concerns” about the proposed procedural changes and outright oppose “a new, automatic thirty percent penalty that would apply regardless of whether the defendant acted in good faith.” The opponents make four points in particular.
First, opponents contend that the 30% “administrative fee” is in fact “a penalty by another name.” They point out that the penalty is “an automatic 30% increase of whatever amount is found owed by the employer, which may already include penalties.” Moreover, the “penalty applies regardless of the type of violation, whether the violation was willful or not, whether the employer appeared at the hearing or not, whether penalties were already assessed under other provisions of the Labor Code, and regardless of the size of the employer.”
Second, the opponents argue that the defendant’s answer should, as now, be due after the formal conference, whereas this bill requires the employer to respond within 30 days of receiving notice of the complaint without there having been a conference. Opponents claim that wage claims “are often filed by employees who, at least initially, are not represented by counsel,” and as such the complaints “may lack sufficient detail” upon which to base a response. Moreover, the initial conference held under the existing process “presents an opportunity for both parties to meet with the Labor Commissioner’s office (and often each other) to flesh out the claim.”
Third, opponents argue that the “Labor Commissioner should enter default judgments based on evidence” rather than requiring the Labor Commissioner to enter a judgment for the amount in the employee’s claim. Fourth, opponents object to the provision in the bill that prohibits the court from consolidating any action filed for appeal with any other action that does not arise out of the wage claim covered by the ODA. Opponents believe that the courts “should have discretion to manage their own dockets to enable the just and efficient resolution of cases.”
REGISTERED SUPPORT / OPPOSITION:
Support
Bet Tzedek (co-sponsor)
California Federation of Labor Unions (co-sponsor)
Center for Workers’ Rights (co-sponsor)
AAAJ- Asian Law Caucus
American Federation of State, County and Municipal Employees, Afl-cio
California Domestic Workers Coalition
California Employment Lawyers Association
California Farmworker Coalition
California Immigrant Policy Center
California Rural Legal Assistance Foundation
California Safety and Legislative Board of Smart – Transportation Division
California State Association of Electrical Workers
California State Pipe Trades Council
Central California Environmental Justice Network
Central Coast Alliance United for a Sustainable Economy
Centro Binacional Para El Desarrollo Indigena Oaxaqueño (CBDIO)
Centro Legal De LA Raza
Chinese Progressive Association
Clean Carwash Worker Center
Employee Rights Center
Filipino Community Center
Garment Worker Center
Inland Empire Labor Council
Instituto De Educacion Popular Del Sur De California
LA Raza Centro Legal
Los Angeles Alliance for a New Economy
Loyola Law School, the Sunita Jain Anti-trafficking Initiative
Maintenance Cooperation Trust Fund
Mission Action
North Valley Labor Federation
Pilipino Workers Center
Public Counsel
Santa Clara County Wage Theft Coalition
South of Market Community Action Network
Street Level Health Project
TODEC Legal Center
Western States Council Sheet Metal, Air, Rail and Transportation
Worksafe
Mixteco Indigena Community Organizing Project
Opposition
Acclamation Insurance Management Services
Allied Managed Care
Anaheim Chamber of Commerce
Associated General Contractors
Associated General Contractors San Diego
Brea Chamber of Commerce
California Apartment Association
California Association of Sheet Metal & Air Conditioning Contractors National Association
California Chamber of Commerce
California Farm Bureau
California Hotel & Lodging Association
California League of Food Producers
California Retailers Association
California State Council of the Society for Human Resource Management (CALSHRM)
California Trucking Association
Carlsbad Chamber of Commerce
Coalition of Small and Disabled Veteran Businesses
Colusa County Chamber of Commerce
Corona Chamber of Commerce
Elk Grove Chamber of Commerce
Flasher Barricade Association
Gateway Chambers Alliance
Glendora Chamber of Commerce
Greater Coachella Valley Chamber of Commerce
Greater High Desert Chamber of Commerce
Housing Contractors of California
LA Canada Flintridge Chamber of Commerce
Lake Elsinore Valley Chamber of Commerce
Long Beach Area Chamber of Commerce
Murrieta Wildomar Chamber of Commerce
National Federation of Independent Business
Newport Beach Chamber of Commerce
Norwalk Chamber of Commerce
Oceanside Chamber of Commerce
Orange County Business Council
Palos Verdes Peninsula Chamber of Commerce
Paso Robles Templeton Chamber of Commerce
Rancho Cucamonga Chamber of Commerce
Santa Clarita Valley Chamber of Commerce
Simi Valley Chamber of Commerce
Southwest California Legislative Council
Valley Industry and Commerce Association
West Ventura County Business Alliance
Western Electrical Contractors Association
Western Growers Association
Analysis Prepared by: Tom Clark / JUD. / (916) 319-2334
Date of Hearing: April 2, 2025
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Liz Ortega, Chair
ABPCA Bill Id:AB 1234 (
Author:Ortega) – As Introduced Ver:February 21, 2025
SUBJECT: Employment: nonpayment of wages: complaints
SUMMARY: Clarifies and revises the steps the Labor Commissioner (LC) may take in the wage claim process to ensure participation by the parties by permitting the entry of default judgment if a defendant fails to answer an employee’s complaint, attend a mandatory settlement conference without good cause, or appear at the hearing on the complaint. Specifically, this bill:
- Makes clarifying and technical amendments.
- Amends the timeline of notification of an employee complaint to provide that within 60 days of receipt of the complaint, the LC shall notify all parties against which the employee complaint has been filed of the allegations asserted in the complaint, including the total amount of wages, penalties, and other demands for compensation alleged due.
- Revises requirements regarding the defendant’s response to the complaint described in 1) to require within 30 days of transmittal of the notice, the defendant(s) to respond by either paying the full amount due as described in the notice or by filing an answer with the Labor Commissioner.
- Requires the response in 3) above to, at a minimum, include both of the following:
- Whether the defendant admits to employing the complainant during any period alleged in the notice.
- If the defendant denies an employment relationship based on a worker’s classification as an independent contractor, the defendant shall provide facts to demonstrate that the classification meets the ABC test as required by state labor law.
- Whether the defendant admits or denies owing any amount to the complainant.
- For any denial of liability for wages, penalties, and other demands for compensation alleged, the defendant shall set forth the particulars in which the employee complaint is inaccurate or incomplete and the facts upon which the defendant intends to rely.
- Whether the defendant admits to employing the complainant during any period alleged in the notice.
- Provides that if the defendant fails to provide an answer within 30 days of transmittal of the notice described in 2) above, the LC shall issue an order, decision, or award (ODA) in the amount stated in the notice. The ODA may be appealed, as specified.
- If the defendant provides an answer, but the answer does not meet the requirements in 4), the LC may provide the defendant with 15 additional days to submit a revised answer. After the 15 days, if the defendant fails to provide an answer within the requirements in 4), the LC shall issue an ODA in the amount stated in the notice which may be appealed.
- Provides that if the LC does not take any further action, as specified, the LC shall, within 30 days of the receipt of the response, notify all parties of the determination.
- Requires, if the LC does not make a determination pursuant to 6) above, the LC to conduct an investigation of the employee complaint. The investigation, assessment, and determination of liability shall be made within 90 days of the receipt of the defendant’s response and shall be made through the following process:
- The LC may decide to hold a mandatory investigatory and settlement conference upon providing notice of the conference to the parties.
- If the claimant fails to attend the conference, the employee complaint may be dismissed unless a claimant can provide a good cause reason for their nonappearance.
- If the defendant fails to attend the settlement conference and does not provide a good cause reason for their nonappearance, the LC may issue an ODA in the amount stated in the notice.
- The LC may issue a subpoena to a defendant requesting copies of payroll records for the employee, as specified, during the claim period. The LC may also issue a subpoena for all records required to be maintained by the relevant wage order, and to any other parties or for any other information as determined by the LC.
- The LC may decide to hold a mandatory investigatory and settlement conference upon providing notice of the conference to the parties.
- Revises the hearing timeline to require, within 90 days of the issuance of the formal complaint, as specified, the LC to set a hearing date and serve a copy of the formal complaint on all parties, along with a notice of the date, time, and place of the hearing.
- Authorizes the LC, if a defendant fails to appear, to issue an ODA in the amount stated in the formal complaint issued. The ODA is appealable, as specified.
- Adds a defendant’s failure to answer or appear as grounds for the LC, within 15 days after the hearing is concluded, to file in the office of the Division of Labor Standards Enforcement (DLSE) a copy of the ODA.
- Provides that the ODA shall also include the amount of interest accrued and the reasons for the decision.
- States that an award granted under this chapter shall impose an administrative fee payable in the amount of 30 percent of the ODA. The administrative fee shall be deposited into the Wage Recovery Fund, which is hereby created.
- Requires, upon appropriation by the Legislature for this express purpose, all money in the Wage Recovery Fund to be available to the LC to compensate the LC for the staffing required to investigate and recover wages and penalties owed to aggrieved employees.
- Adds that if an appeal is filed in superior court, the appeal is classified as an unlimited civil case.
- Provides that a party seeking appeal is unsuccessful if they withdraw their appeal without a judgment. Adds to the grounds for an employee to be deemed successful, that the defendant voluntarily pays an amount greater than zero.
- States that a court hearing an appeal of the ODA has jurisdiction over the entire wage dispute, including related wage claims not raised in front of the LC.
- Prohibits a court from consolidating an appeal filed under this section with any other action not arising out of, or related to, the wage claim covered by the underlying ODA absent an executed agreement in writing by all parties.
EXISTING LAW:
- Authorizes the LC to investigate employee complaints. The LC may provide for a hearing in any action to recover wages, penalties, and other demands for compensation, including liquidated damages, as specified, properly before the DLSE or the LC, including orders of the Industrial Welfare Commission, and shall determine all matters arising under their jurisdiction. (Labor Code §98(a)).
- Requires, if the determination is made by the LC to hold a hearing, the hearing shall be held within 90 days of the date of that determination. (Labor Code §98(a)).
- Requires, when a hearing is set, a copy of the complaint, which shall include the amount of compensation requested, together with a notice of time and place of the hearing, to be served on all parties, personally or by certified mail, or in another manner, as specified. (Labor Code §98(b)).
- Authorizes, within 10 days after service of the notice and the complaint, a defendant to file an answer with the LC in any form as the LC may prescribe, setting forth the particulars in which the complaint is inaccurate or incomplete and the facts upon which the defendant intends to rely. (Labor Code §98(c)).
- Provides that if the defendant fails to appear or answer within the time allowed under these provisions, no default shall be taken against him or her, but the LC shall hear the evidence offered and shall issue an ODA in accordance with the evidence. (Labor Code §98(f)).
- Requires, within 15 days after the hearing is concluded, the LC to file in the office of the DLSE a copy of the ODA. The LC shall serve a copy of the decision personally, by first-class mail, or in another manner, as specified. (Labor Code §98.1(a))
- Permits, within 10 days after service of notice of an ODA the parties to seek review by filing an appeal to the superior court, where the appeal shall be heard de novo. (Labor Code §98.2(a))
FISCAL EFFECT: Unknown
COMMENTS: According to the author, “The LC wage claim process is broken. It involves significant delays, often taking two or more years before a first hearing is scheduled. Employers are not required to engage and can fail to appear or respond to claims, dragging out the process and hindering workers’ ability to recover unpaid wages.
AB 1234 reduces the LC Office’s wage theft backlog by compelling employer participation in the process, thus avoiding unnecessary delays. It also strengthens the procedural requirements for employers that challenge claims, including requiring documentation and evidence for disputes over claim amounts. These procedural enhancements will shorten the time it takes to resolve claims and help workers recover a greater percentage of the money owed to them.”
The author continues, “AB 1234 promotes equity and maximizes benefits for underserved and marginalized communities because it will create a faster and more efficient wage claim process for workers who disproportionately experience wage theft. People of color, especially Black and Latino workers, are overrepresented in low wage industries with higher rates of wage theft, including agriculture, construction, garment, and hospitality. And undocumented workers are three times more likely than U.S. born workers to experience wage violations, because employers have found that fear of retaliation is often enough for them to be able to exploit vulnerable workers.”
The Extent of Wage Theft
The extent of wage theft in the United States and in California, specifically, cannot be underscored. Researchers studying wage theft estimate that workers throughout the country lose $15 billion annually from minimum wage violations alone.[1] In California, workers lose on average a staggering $2 billion annually due to unpaid wages.[2] Unfortunately, much of these wages are never recovered nor returned to the worker.
Wage theft is prevalent across industries and occupations but impacts certain workers disproportionately. For example, a recent study by Rutgers University that reviewed minimum wage violations in four metropolitan areas of California from 2014-2023, found that Black and Latinx workers are more likely to experience wage theft than their white counterparts.[3] Women are more likely than men to be paid below the minimum wage and both older and younger workers are more susceptible to wage theft than workers at a mid-career point.[4] Furthermore, part-time workers are 2-3 times more likely to experience minimum wage violations than full-time workers.[5] Finally, industries such as domestic work, personal and laundry service, and food service had some of the highest violation rates during the period studied.[6]
The Wage Claim Process Leaves Workers Behind
California’s Office of the LC is charged with, among other things, adjudicating worker wage claims. Wage claims can cover a number of issues, including, unpaid overtime, missed meal and rest periods, or the failure to pay wages. The LC is statutorily required to determine whether a wage claim needs a hearing within 30 days of receiving the claim. In addition, the LC has 90 days to hold a hearing from making that determination and 15 days from the hearing to issue a decision.
Unfortunately, the reality is that workers’ claims generally take two years or longer to go through the adjudicatory process.[7] Contributing factors to this lengthy timeline are high vacancy rates, low salaries, and an enormous backlog of cases (47,000 in 2023-2024).[8] Due to this significant lag in resolution, workers who prevail in their cases are receiving pennies on the dollar compared to their claim amount. In fact, only 12 percent of workers using the LC’s enforcement process receive their full award.[9] For low-wage workers in particular, partial awards are not coming close to meeting their financial needs and obligations.
The Legislative Response to Wage Theft
On the heels of last year’s state audit of the LC, legislators are introducing significant bills to reform the wage claim process. This appears to be a watershed moment, wherein state policymakers feel a sense of urgency to address a system that is failing to deliver timely relief to thousands of workers. There are at least five wage theft bills this session, including this measure. These bills do a number of things to strengthen the enforcement process, including providing stiffer penalties for wage theft offenders, authorizing state agencies to deny licenses or permits to employers with outstanding judgments, and increasing transparency by posting outstanding judgments on the DLSE website.
Arguments in Support
The Center for Workers’ Rights, California Federation of Labor Unions, and Bet Tzedek, sponsors of the bill, state “Despite the best efforts of the Labor Commissioner and other enforcement agencies, state-level enforcement of labor law violations is inadequate. The agencies are underfunded and understaffed with the vacancy rate at the Labor Commissioner’s Office (LCO) above 30%. Even when fully funded and staffed, there are millions of employers and workplaces in California, and wage theft is pervasive. In 2023 alone, workers filed 39,000 wage theft claims with the LCO.
Current procedures for processing wage claims involve significant delays, often taking two or more years before a hearing is scheduled. Employers are not required to engage in the wage claim process and can fail to appear or respond to claims, refuse to communicate with the LCO, or otherwise deliberately delay the process leading to prolonged resolution times and hindering workers’ ability to recover unpaid wages.”
Arguments in Opposition
A coalition of employer organizations, including the California Chamber of Commerce, is opposed and states, “We support the goal of expediting claims through the Labor Commissioner’s office, especially in circumstances where the employer does not take the claim seriously. However, we have some concerns about the proposed procedural changes and cannot support a new, automatic thirty percent penalty that would apply regardless of whether the defendant acted in good faith.
AB 1234 imposes a thirty percent “administrative fee” on every single order, decision, or award issued by the Labor Commissioner.1 This is a penalty by another name. It is an automatic 30% increase of whatever amount is found owed by the employer, which may already include penalties.
That penalty applies regardless of the type of violation, whether the violation was willful or not, whether the employer appeared at the hearing or not, whether penalties were already assessed under other provisions of the Labor Code, and regardless of the size of the employer. It also applies to any ODA where the defendant is an individual person, which is a possibility under Labor Code section 588.1.”
Related Legislation
AB 485 (Ortega): Requires state agencies to deny a new license or permit, or the renewal of an existing license or permit, for employers that have outstanding wage theft judgments and have not obtained a surety bond or reached an accord with the affected employee to satisfy the judgment. This measure is in Assembly Appropriations.
AB 1002 (Gabriel) of 2025 states the intent of the Legislature to enact subsequent legislation strengthening remedies against licensed contractors who repeatedly commit labor violations against workers. This bill is pending referral in Assembly Rules.
SB 261(Wahab) of 2025 requires the LC to post a copy of the order, decision or award (ODA) on the division’s internet website, as specified, no later than 15 days after the time to appeal from the ODA has expired and no appeal therefrom is pending. Additionally the bill would require the DLSE to post on its internet website specified information about any employer with an unsatisfied ODA. This bill is pending in the Senate Labor, Public Employment and Retirement Committee.
SB 310 (Wiener) of 2025 provides that for certain penalties associated with failure to pay wages, the penalties may be collected by the worker through an independent civil action. This bill is pending in the Senate Labor, Public Employment and Retirement Committee.
SB 355 (Perez) of 2025 would establish a process through which the LC’s office would work with the Department of Motor Vehicles to suspend the driver’s license of an individual person subject to a judgment for nonpayment of wages, as well as suspend the commercial vehicle registrations held by the judgement debtor, as specified. This bill is pending in the Senate Labor, Public Employment and Retirement Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
Bet Tzedek Legal Services (Co-Sponsor)
California Federation of Labor Unions(Co-Sponsor)
Center for Workers' Rights (Co-Sponsor)
California Farmworker Coalition
Central California Environmental Justice Network
Central Coast Alliance United for A Sustainable Economy
Centro Binacional Para El Desarrollo Indigena Oaxaqueño
Todec Legal Center
Mixteco Indigena Community Organizing Project
Oppose
Acclamation Insurance Management Services
Allied Managed Care
Anaheim Chamber of Commerce
Associated General Contractors
Associated General Contractors San Diego
Brea Chamber of Commerce
California Apartment Association
California Association of Sheet Metal & Air Conditioning Contractors National Association
California Chamber of Commerce
California Farm Bureau
California Hotel & Lodging Association
California League of Food Producers
California Retailers Association
California State Council of The Society for Human Resource Management
California Trucking Association
Carlsbad Chamber of Commerce
Coalition of Small and Disabled Veteran Businesses
Colusa County Chamber of Commerce
Corona Chamber of Commerce
Elk Grove Chamber of Commerce
Flasher Barricade Association
Gateway Chambers Alliance
Glendora Chamber of Commerce
Greater Coachella Valley Chamber of Commerce
Greater High Desert Chamber of Commerce
Housing Contractors of California
LA Canada Flintridge Chamber of Commerce
Lake Elsinore Valley Chamber of Commerce
Long Beach Area Chamber of Commerce
Murrieta Wildomar Chamber of Commerce
National Federation of Independent Business
Newport Beach Chamber of Commerce
Norwalk Chamber of Commerce
Oceanside Chamber of Commerce
Orange County Business Council
Palos Verdes Peninsula Chamber of Commerce
Paso Robles Templeton Chamber of Commerce
Rancho Cucamonga Chamber of Commerce
Santa Clarita Valley Chamber of Commerce
Simi Valley Chamber of Commerce
Southwest California Legislative Council
Valley Industry and Commerce Association
West Ventura County Business Alliance
Western Electrical Contractors Association
Western Growers Association
Analysis Prepared by: Megan Lane / L. & E. /
Poydock, Margaret, and Zhang, Jiayi. “More than $1.5 billion in stolen wages recovered for workers between 2021 and 2023.” Economic Policy Institute, December 20, 2024. ↑
Cooper, David, and Teresa Kroeger. “Employers Steal Billions from Workers’ Paychecks Each Year.” Economic Policy Institute, May 2017. ↑
Galvin, Daniel J., Barnes, Jake, Fine, Janice, and Round, Jenn. “Wage theft in California: Minimum Wage Violations, 2014-2023.” Rutgers School of Management and Labor Relations, May 2024. ↑
Ibid. ↑
Ibid. ↑
Ibid. ↑
California State Auditor Report, “The California Labor Commissioner’s Office: Inadequate Staffing and Poor Oversight Have Weakened Protections for Workers.” Report #2023-104, May 29, 2024. ↑
Ibid. ↑
Ibid. ↑
Discussed in Hearing
51SEC
Senate Standing Committee on Appropriations
14MIN
Senate Standing Committee on Judiciary
13MIN
Senate Standing Committee on Labor, Public Employment and Retirement
2MIN
Assembly Floor
21MIN
Assembly Standing Committee on Judiciary
20MIN
Assembly Standing Committee on Labor and Employment
Bill Author
