Legislative Update: Intentional Wage Theft Could Result in Criminal Liability

by Meagan D. Bainbridge
The Labor & Employment Law Blog

On September 27, 2021, Governor Newsom signed AB 1003 into law. AB 1003 adds a new type of grand theft to Penal Code section 487m for an employer’s intentional theft of wages in an amount greater than $950 (from any one employee), or $2,350 (from two or more employees) in a 12-month period. Violations of this new law also carry a potential prison sentence of up to three years. AB 1003 further allows for the recovery of wages through a civil action.

Generally, wage theft occurs when employers fail to pay their workers all the wages they are owed. AB 1003 includes independent contractors as “employees,” and the hiring entity of an independent contract as the “employer.” Examples of wage theft could include paying less than minimum wage, failure to pay overtime, failure to provide compliant meal and rest breaks, and/or requiring employees to work off the clock. As such AB 1003 targets managers and supervisors tasked with implementing personnel policies related to compensation and meal and rest breaks, those responsible for overseeing timekeeping practices, and those superficially tasked with providing wages and breaks to employees in California.

While AB 1003 undoubtedly will cause the pulse of many to rise, it should be noted that under the new law, the wage theft must be intentional. This means that it is unlikely that inadvertent or honest mistakes will be actionable. Employers (and those who hire independent contractors) should review their compensation policies and practices to ensure they comply with California law. They should further ensure those responsible for implementing compensation policies understand their obligations. If you have questions regarding whether your employment policies and practices comply with California law, contact an employment attorney at Weintraub Tobin for guidance.