Assembly Bill 1003: What the Newly Strengthened Law Means for Business Owners

While I make my living as an attorney, I am also a business owner. I know firsthand just how challenging – and personally rewarding – it can be to own and operate one’s own business. As the owners of Proper Defense, my wife and I both know that there are more than a few California laws with which all business owners must comply. 

It doesn’t take much for an honest, well-intentioned business owner to run afoul of California’s business and labor laws. Among the laws with significant importance are those pertaining to wages and wage theft. Simply put, wage theft is a general term for withholding or otherwise not paying an employee’s due compensation or benefits. 

California recently adopted a new law, Assembly Bill 1003, which greatly strengthens the state’s wage theft law. The legislation made intentional theft of wages in an amount greater than $950 from any one employee in a 12-month period punishable as grand theft. The bill also recognizes $2,350 in the aggregate from two or more employees as grand theft. Independent contractors are treated as employees for the sake of the new law.

The legislation was authored by Assembly Member Lorena Gonzales. It was based, at least in part, on a 2015 study “Level the Playing Field: Put California’s Underground Economy Out of Business” by the Little Hoover Commission. That commission is a bipartisan independent California oversight board.

In its study, the Little Hoover Commission identified a host of ways California employers are breaking wage theft laws. These are their key findings from the study, showing the most common violations:

Minimum Wage Violations, occurring when a worker is paid underneath that wage. 

Overtime Violations, occurring when a worker isn’t compensated for working overtime. In general, California workers must be paid 1.5 times their regular rate of pay when working more than eight hours in a single workday or 40 hours in a single workweek.  

Off-the-clock Violations, occurring when workers are made to work without pay before or after shifts.

Meal and Rest Break Violations, occurring when workers are not provided legally compliant meal and rest periods. 

Late / No Pay Violations, occurring when employees are not paid all wages earned within the strict timelines required under California law

Illegal Deductions Violations, occurring in some instances when expenses are deducted from an employee’s paycheck for equipment, damage or loss, cash register shortages, transportation, and uniforms.

Under the new law, an employer found guilty of wage theft could be charged with a misdemeanor or a felony. A misdemeanor could lead to one year of incarceration in county jail. A felony could result in imprisonment in county jail from 16 months to three years. A key component of the law is that the theft must have been intentional by the employer. 

To avoid unfortunate surprises now and in the future, at Proper Defense, we always recommend a proactive approach. For employers, this includes the recommendation to take an inventory of their policies and business practices to ensure they are doing all they can to protect themselves and their employees. 

Proper Defense Civil Division Founder Justin Vecchiarelli focuses his practice in employment and labor law. His extensive experience has helped businesses of all sizes make sure they are in compliance (and continue to stay in compliance). In the meantime, this self-inventory of your business includes the following considerations as mentioned in recent news about AB 1003:

  • Are employees required to review and affirm their timecard entries are correct with a signature?
  • Does your business have a method of resolution for errors in pay?
  • Are there procedures in place to ensure employee overtime hours are paid according to the correct rate?
  • If employing independent contractors, review any agreements or invoices to ensure correct compensation is being paid and that the law allows for the independent contractor to be classified as such

The new law is primarily intended as a deterrent. However, it does carry significant consequences if an employer is found guilty of violating it. Should you be charged or threatened with a wage theft crime, it is imperative you have the appropriate legal representation. Legal cases are stressful, have multiple complicated hearings, and require an attorney with the appropriate education and experience. A good defense attorney can easily make the difference between a charge being filed by the prosecutor as a felony or a misdemeanor, a longer sentence or a shorter sentence, time incarcerated, or time spent in a diversionary program with community service. 

Because wage theft is considered a white-collar crime, it is especially important that you choose a firm like ours with our blend of criminal and civil law experience. White-collar crimes are notoriously more complex than many criminal charges and the potential ramifications can impact a person’s professional career and reputation. 

At Proper Defense, we are uniquely qualified to represent individuals, public officials, businesses, corporate officers and directors, and employees who are under investigation by State and Federal law enforcement agencies.

For a true advocate that you can trust, in a judgment-free zone, contact Proper Defense Law Corporation today. For a FREE consultation in the Fresno area, call (559) 825-3800. You can reach us at our Beverly Hills location by calling (424) 284-4066. You can also schedule an appointment online on our Contact Us page. It gets better with Proper Defense, we promise.

In addition to this information, other resources that may be available to you can be found by searches such as: wage theft statistics 2020, employee wage theft, is wage theft illegal, wage theft california, wage theft 2020, wage theft criminal charges, wage theft 2021, wage theft report, how long does a wage claim take in california, california wage theft penalties, wage theft examples, report wage theft california, wage theft california form, wage theft california notice, unpaid wages california, california labor commissioner hearing rules, is wage theft a crime in california, california wage theft notice exempt employees, or california wage theft notice form.

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