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Dec 15

New California Law Permits Labor Commissioner to Award Liquidated Damages for Minimum Wage Violations

As of January 1, 2012, many new employment laws will take effect in California that will have a significant impact on California employers.  One of these laws is AB 240, which will amend California Labor Code sections 98 and 1194.2.  California law currently sets a minimum wage for all employees in California, with limited exceptions, and prohibits employers, unless specified, from paying less than the state minimum wage.  Employees who believe they have a claim for their employer’s failure to pay minimum wages have the option of filing a lawsuit in superior court, or filing a claim with the Labor Commissioner’s office.  Current law, however, permits aggrieved employees to recover liquidated damages only through complaints filed in court. 

In an effort to ensure that victims of minimum wage violations receive the same relief regardless of whether they file a complaint in court or with the Labor Commissioner, Governor Jerry Brown signed AB 240 into law on September 7, 2011.  AB 240 authorizes the Labor Commissioner to “recover liquidated damages in an amount equal to the wages unlawfully unpaid and interest thereon,” for an employee who brings a complaint alleging payment of less than the minimum wage.  AB 240, however, also provides that if an employer “demonstrates to the satisfaction of the court or the Labor Commissioner that the act or omission giving rise to the action was in good faith and that the employer had reasonable grounds for believing that the act or omission was not a violation of any provision of the Labor Code relating to minimum wage, or an order of the commission, the court or the Labor Commissioner may, as a matter of discretion, refuse to award liquidated damages.”  The new law will not only increase the likelihood that employers will have to pay liquidated damages for minimum wage violations, but will likely result in more employees pursuing their minimum wage claims through the Labor Commissioner.

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