Last fall, California Governor Newsom signed AB 1003, a law stating that employers’ intentional theft of wages or tips from employees constitutes and can be punishable as grand theft. The new wage theft law took effect on January 1, 2022. Employers should be sure to update their employee handbooks and personnel policies and procedures to reflect the new requirements.
Requirements for Grand Theft
AB 1003 creates a new Section 487(m) of the California Penal Code. Under AB 1003, an employer’s intentional theft of wages or tips in an amount of more than $950 from one employee or $2350 from two or more employees in any 12 consecutive month period is punishable as grand theft. Under Section 487(m), prosecutors have the discretion to charge either a misdemeanor or a felony. As discussed below, the penalties for a felony charge are greatly enhanced over the misdemeanor charge.
AB 1003 Definitions
AB 1003 defines the following terms:
Theft of wages is defined as the intentional deprivation of wages, as defined in Section 200 of the California Labor Code; gratuities, as defined in Section 350 of the California Labor Code; benefits; or other compensation, by unlawful means, with the knowledge that the wages, gratuities, benefits, or other compensation is due to the employee under the law.
For the purposes of AB 1003, The term employee includes independent contractors, and the definition of employer includes those who hire independent contractors.
Importantly, the statute does not define “intentional” wage theft. For this reason, employers should be sure to analyze their compensation policies and procedures and undertake any corrective measures in those policies and procedures to ensure compliance with the law. Prudent employers may also want to offer additional training to their employees and any independent contractors.
The following are among the examples of wage theft provided by the California Department of Industrial Relations:
- Paying less than minimum wage per hour
- Not allowing employees to take required breaks for meals, rest and cool-downs
- Not paying agreed-upon wages, including overtime on commissions, piece rate, and regular wages
- Not accruing or allowing employees to use paid sick leave
- Bouncing paychecks
- Making late payment of final paychecks
- Failing to provide timely access to personnel and payroll records
- Taking unauthorized pay deductions
- Not paying promised bonuses or vacations
- Not paying promised shift premiums
- Not reimbursing business expenses
- Withholding employee tips
- Not paying reporting time pay
Penalties and Restitution
If the violation is charged as a misdemeanor, violators of the wage theft statute are subject to up to one year’s imprisonment in county jail. If charged as a felony, on the other hand, violators are subject to imprisonment for up to 3 years, a fine, or a fine and imprisonment.
AB 1003 also provides that the employee may recover any wages, tips, gratuities, benefits, or other compensation underlying the prosecution as restitution. Moreover, the employee and the Labor Commission may also commence a civil action based on the same facts and circumstances as the criminal action.
Contact a California Employment Law Attorney Today
If you are an employer or an employee with legal concerns related to wage theft or other wage and hour issues, you should talk to a lawyer today. To schedule a consultation with an attorney, call Kalia Law today at (650) 701-7617 or contact us online.