Legislative Update: Intentional Salary Theft Could Result in Criminal Liability | Weintraub Tobin

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On September 27, 2021, Governor Newsom promulgated AB 1003. AB 1003 adds a new type of grand theft to section 487m of the Criminal Code for an employer intentional Theft of wages in excess of $ 950 (to one employee) or $ 2,350 (to two or more employees) over a 12-month period. Violations of this new law are also punishable by a prison sentence of up to three years. AB 1003 also allows the recovery of wages through civil action.

Typically, wage theft occurs when employers do not pay their workers all of the wages owed to them. AB 1003 includes independent contractors as “employees” and the hiring entity of an independent contract as “employer”. Examples of salary theft could include paying less than minimum wage, failing to pay overtime, failing to provide compliant meal and rest breaks and / or requiring employees to work outside the clock. As such, AB 1003 targets managers and supervisors responsible for implementing personnel policies relating to pay and meal and rest breaks, those responsible for overseeing timing practices, and those who are superficially responsible for providing wages and breaks to employees in California.

While AB 1003 will undoubtedly increase the pulse a lot, it should be noted that under the new law, the theft of wages must be intentional. This means that unintentional or honest mistakes are unlikely to result in action. Employers (and those who hire independent contractors) should review their compensation policies and practices to ensure they are complying with California law. They should also ensure that those responsible for implementing remuneration policies understand their obligations.


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