Governor Signs Lorena Gonzalez Bill to Crackdown on Employers Who Steal Workers’ Wages

Wednesday, September 30, 2020

SACRAMENTO – (Wednesday, Sept. 30, 2020) – Today, Governor Gavin Newsom signed Assembly Bill 3075 authored by California State Assemblywoman Lorena Gonzalez (D-San Diego) to protect workers from being cheated out of earned wages.  

“Cheating workers out of the pay they’ve earned is no different than stealing from them,” Assemblywoman Gonzalez said. “Now, when employers are found to have committed wage theft, they won’t be able to simply open a new business to avoid paying California workers what they are due.”

AB 3075 creates successor liability for court judgments on unpaid wages to prevent employers who have committed wage theft from simply reorganizing as a “new entity,” changing their company name, or hiding their assets to avoid paying fines and their workers.

California often fails to hold employers accountable for not paying their workers. A 2013 report by the UCLA Labor Center found that even after legally binding judgments are issued ordering employers to pay, only 17 percent of workers from 2008 to 2011 were able to recover any wage payment at all. Of the more than $282 million in unpaid wages issued by the Labor Commissioner’s office during that period, workers were able to collect only $42 million (or 15 percent).

When workers try to enforce judgments for unpaid wages, they often find that their employer has disappeared, hidden assets, or shut down operations and reorganized as a new entity. In 60 percent of cases where Labor Commissioner judgements were issued against business entities, the 2013 UCLA report found those employers who owed their workers unpaid wages were found to be “non-active” business entities by the California Franchise Tax Board and the Secretary of State.

AB 3075 will add a provision to require individuals to attest that they do not have outstanding wage judgements against them before incorporating a new business. It will also expand successor liability, to ensure law-breaking employers cannot simply transfer ownership to avoid their court-ordered judgments, and clarify existing law that local wage enforcement agencies may also enforce state wage theft laws, allowing a worker who files a claim in a local office to recover everything they are owed without having to file simultaneously with the state.

For questions on AB 3075 or to schedule an interview with Assemblywoman Gonzalez, contact Sami Gallegos: samantha.gallegos@asm.ca.gov