Governor Gavin Newsom has signed Assembly Bill 1003 into law, officially designating wage theft as grand theft in a major win for workers’ rights. The bill, championed by Assemblywoman Lorena Gonzalez, raises compensation fraud to a felony crime, making it an imprisonable offense.
It’s true that wage theft has been against the law for many years. However, groups like the Economic Policy Institute have long argued that the penalties for the crime weren’t strong enough to act as a deterrent. With the new bill, workers throughout California have one more tool in their fight against compensation fraud. Here’s everything you need to know about compensation fraud and Assembly Bill 1003, and what to do if you’re facing wage theft.
The Impact of Wage Theft
Wage theft is one of the most common crimes in America, and it’s responsible for more stolen money than any other crime. In California alone, more than $2 billion never makes it to workers every year. That’s a lot of money, and it has an impact.
Workers are those who are impacted most directly. A study from 2011 found that employees suffering from wage theft lost between one-third and one-half of their income. The study examined California and New York workers and found that this crime pushed between 15,000 and 67,000 families below the poverty line and up to 100,000 families even further into poverty. People who should be able to support themselves are having their wages directly stolen by their employers, putting them in dangerous financial situations.
Beyond the victims themselves, this crime still has an outsized impact. It’s estimated that California loses nearly $10 million every year in unpaid income taxes because of compensation fraud. That money is intended to support the legal system and other essential elements of California’s government, so the loss impacts everyone in the state.
What Is Assembly Bill 1003?
This is where Assembly Bill (AB) 1003 comes in. This bill, recently signed into law by Governor Newsom, will take effect on January 1st, 2022. It specifically targets the intentional stealing of wages, compensation, tips, and other benefits. Any theft of more than $950 for a single employee or $2350 for two or more employees in a year is considered grand theft, on par with embezzlement or stealing a car.
This is a significant increase from current laws. At the moment, wage theft is only considered a misdemeanor, regardless of the amount withheld. As a result, many employers consider the potential tradeoffs worthwhile and continue their compensation theft.
How AB 1003 May Prevent Wage Theft
By raising the potential penalties for this crime, AB 1003 makes the crime significantly more costly. Instead of facing a fine and a slap on the wrist, employers who commit compensation fraud could be sent to prison for up to three years.
This is particularly noteworthy in industries like food service and construction, where compensation fraud is most common. These industries are also full of contractors and independent businesses where it’s clear who’s responsible for paying wages. By making compensation fraud a felony, California subjects these people to direct, impactful consequences if they choose to withhold funds.
This is predicted to have dramatic impacts on how often this crime occurs. While it’s unlikely to completely end unlawful pay practices, it should significantly reduce them
Addressing Wage Theft in Civil Court
There’s no doubt that AB 1003 will act as a powerful deterrent against compensation fraud. However, it has two significant problems. First, it doesn’t address wage theft that’s currently taking place since it doesn’t go into effect for several months. Second, it doesn’t actively add ways for workers to reclaim their missing wages. So, while the bill acts as a deterrent against compensation fraud, it doesn’t give victims a way to reclaim what they’re owed.
However, workers can still take action on their own. It’s already legal for employees to sue their employers in civil court to reclaim wages lost to compensation fraud. Here’s how the process works.
- Make sure you’re eligible. Not every worker is protected by wage and hour laws in California. So-called “exempt” employees aren’t covered by these laws, for example. If you work a “white-collar” job, act as a contractor, or earn a commission, you’re likely an exempt worker. Otherwise, you’re covered under wage and hour laws, and you can fight back.
- Determine how much you’ve lost. Next, you need to figure out how much you’ve actually lost to compensation fraud. This is when you should start collecting evidence, too. There are several ways employers may commit this crime, from altering hours on your time card to paying less than mandatory minimums to forcing you to work through your breaks. Gather evidence like printed schedules, pay stubs, and emails to prove that you’ve been working without receiving appropriate compensation.
- Work with a lawyer to file a lawsuit. The last and most crucial step is to work with a qualified lawyer to file a lawsuit. If you’re already losing money to your employer, you shouldn’t give them another advantage in court by showing up without representation. A good attorney can help you prove beyond a reasonable doubt that you’re actually a victim of wage theft.
Once AB 1003 goes into effect, it could make this process easier. A conviction in a criminal court is a significant piece of evidence you can use in civil court. While a criminal conviction does not guarantee that you’ll win a civil lawsuit, it can go a long way to proving your case.
Reclaim Your Rightful Wages
If you’re facing wage theft, you have options. While AB 1003 doesn’t go into effect until 2022, you can still take civil action now. A civil lawsuit can force your employer to not only stop future crimes but repay back wages for all the money that they stole from you.
To get started, reach out to a qualified wage and hour lawyer. A good attorney will help you collect evidence and build your case so you can reclaim all of the wages you’re due. You’ve put in the work, and you deserve to get paid for it. Don’t wait to fight back. Get in touch today to start the process and get the money you’re owed sooner rather than later.
