California turns up the heat on Employers who intentionally engage in wage theft: wage theft is now punishable as a felony.
Grand Theft of Wages…
a felony!
A bill signed into law by Governor Newsom last year, which went into effect on January 1, 2022, has made the intentional theft of wages above a threshold amount punishable as a felony! Prior to 2022, the intentional theft of an employee’s wages was only punishable as a misdemeanor.
The bill (AB1003) defines “grand theft of wages” as “an intentional theft of wages, including gratuities, in an amount greater than $950 from any one employee, or $2,350 in the aggregate from 2 or more employees, by an employer in any consecutive 12-month period.”
The California Labor Commissioner lists various examples of wage theft. Wage theft can be found where the employer is paying the employee less than minimum wage or where the owners / managers take an employee’s tips. In addition, wage theft can occur where the employer flat our refuses to give an employee a meal break or rest break. Other examples include failing to pay the employee the agreed upon wages or taking unauthorized deductions from the employee’s check. Upon termination or resignation, wage theft may occur if the employer fails to pay the employee’s final wages in a timely manner.
The minimum wage for California employees had increased to $15 an hour this year, so the threshold amount of $950 for one employee can be reached quite easily. For example, an employee is entitled to one hour’s pay for each rest and meal break missed. If an employee was refused his or her rest and meal breaks for an entire month and is being paid the minimum wage of $15 an hour, he or she could be entitled to approximately $600 in unpaid wages in one month (based on a 40 hour workweek). Clearly, it doesn’t take long to rack up $950 in unpaid wages. Of course, the theft must be intentional, i.e. the employer refused or made it impossible for the employee to take the rest or meal breaks.
For employers, this change reiterates the importance of conducting regular audits of their employee’s hours, clock-in and clock-out times, and their rest and meal breaks. Some best practices for employers include asking employees to verify their time-sheets, which should include their clock-in and clock-out stamps. Employers should also create guidelines for conducting regular audits of their payroll and actually do the audits. In addition, employers should carefully review all agreements and invoices with their independent contractors.
If you have questions or concerns, contact our office and speak with one of our experienced employment attorneys. We can help you ensure compliance, minimize your liability, and protect you from any criminal charges.