A new law making the intentional theft of wages punishable as grand theft, and thus a felony, will go into effect on January 1, 2022.
California Governor Gavin Newsom signed Assembly Bill No. 1003 (“AB 1003”) into law on September 27, 2021. AB 1003 creates California Penal Code Section 487(m), which makes the “intentional” theft of wages in an amount greater than $950 from any one employee, or $2,350 in the aggregate from two or more employees, by any employer in a 12-month period punishable as grand theft.
AB 1003 defines “theft of wages” as “the intentional deprivation of wages, as defined in Section 200 of the Labor Code, gratuities, as defined in Section 350 of the 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.”
Under AB 1003, independent contractors are included under the definition of “employee” and hiring entities of independent contractors are included under the definition of “employer.”
Changing intentional wage theft to a felony may increase the number of charges brought against employers by government authorities. AB 1003 also does not prohibit employees or the California Labor Commissioner from commencing a civil action to seek remedies provided for under the California Labor Code. The new legislation also allows base wages, gratuities, and other compensation that are the subject of a prosecution to be recovered as restitution.
Employers should ensure compliance with wage and hour laws, including, but not limited to, making sure all wages are paid in a timely fashion, ensuring policies are in the place to identify payroll errors, and tracking the payout of all gratuities.
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