Legislation to Crackdown on Employer Wage Theft Goes to the Governor’s Desk

Monday, August 31, 2020

SACRAMENTO – (Monday, Aug. 31, 2020) – Business owners will not be able to evade their responsibility to pay their workers thanks to Assembly Bill 3075 by California State Assemblywoman Lorena Gonzalez (D-San Diego), which passed the state Assembly today on a concurrence vote and is now on its way to the governor’s desk for consideration.

“A person should not lose out on their hard-earned wages because an unscrupulous employer decided to close-up shop without paying their workers. But this happens often, and even during this pandemic we have heard stories of workers who were laid off and still haven't received the last paycheck they're owed,” Assemblywoman Gonzalez said.

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.

Employers in California are often not held accountable for failing to pay their workers. A 2013 report by the UCLA Labor Center found that even after legally binding judgments have been 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 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 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