New California Wage Theft Law: Potential Prison Time for Violators

A new California wage theft law would make intentional wage theft punishable as grand theft.

Passed in late September 2021, the new law would allow prosecutors to determine whether an employer could be charged with a misdemeanor or felony for intentionally committing theft of wages, benefits, tips or other compensation:

• More than $950 for one employee and more than $2,350 for two or more employees in any 12 consecutive month period

New Wage Theft Law in California

Because intentional wage theft would be considered a new type of grand theft, employers found in violation could also face jail time or even be sent to prison in certain circumstances.

Meanwhile, independent contractors are included under the definition “employee,” and hiring entities of independent contractors are included within the definition of “employer.”

The law authorizes wages, gratuities, benefits, or other compensation that are the subject of a prosecution under these provisions to be recovered as restitution in accordance with existing provisions of California law.

The bill’s sponsor, Assemblywoman Lorena Gonzalez, cited a report that says wage theft violations cost California employees nearly $2 billion annually.

Employers who intentionally commit wage theft can now face jail time under our #AB1003! Such egregious crimes should be met with real consequences. Hopeful this will deter bad actors & make them think twice before stealing workers' hard earned wages. https://t.co/QU7gJtc7LK pic.twitter.com/bj3rrwUmNm

— Lorena Gonzalez (@LorenaAD80) September 27, 2021

California Wage Theft

Even before last month, California already had strong wage theft laws on the books.

The California Equal Pay Act has been in existence for decades, followed by the Wage Theft Protection Act of 2011 and the 2015 signing of the California Fair Pay Act.

Employers can face liens on property for unpaid back wages, and the state has provided resources for employees and allows broad leeway for state investigative authorities.

Now, of course, employers found in violation of intentional wage theft face hefty fines and potentially prison time.

Wage Theft Nationwide

With the rise of minimum wage laws in recent years, wage theft— intentional or not — has become more of an issue for employers. It can take many forms in terms of wage and hour laws, including:

• Overtime
• Minimum wage
• Misclassification
• Illegal deductions
• Off-the-clock violations
• Rest break violations

In addition to California’s new law, two other jurisdictions recently passed wage theft laws.

Chicago’s new wage theft law went into effect Aug. 1, 2021. Employers can be found in violation for:

• Failing to pay an employee in a timely manner
• Not paying an employee for work performed
• Non-payment of paid time off
• Non-payment of contractually required benefits

Meanwhile, Virginia also passed new wage theft laws in 2020. It created harsh penalties for violations and increased employee protections. Virginia’s wage theft laws made updates that include:

• Increased fine amounts
• Making general contractors liable under certain conditions
• Expanded investigative authority for the Virginia Department of Labor and Industry
• Enhanced employee protections for reporting suspected wage theft

Conclusion

Most employers don’t set out to commit wage theft. But it still happens.

And California’s response to intentional wage theft could open the door for more employee complaints. Employers should continually review their policies and practices to ensure they are not found in violation of the law, in California and elsewhere.

This Employment Law News blog is intended for market awareness only, it is not to be used for legal advice or counsel.