ALERT: Wage Theft Equals Grand Theft

On September 27, 2021, Assembly Bill No. 1003 (“AB 1003”) was signed into law. AB 1003 makes the intentional “theft of wages” from an employee a form of “grand theft”, punishable by Penal Code Section 487m. Importantly, AB 1003 defines employee to include independent contractors, and employer to include the hiring entity of the independent contractor, expanding the scope of AB 1003 significantly.

AB 1003 defines “theft of wages” as the intentional deprivation of wages, gratuities, 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. In layman terms, if an employer intentionally deprives an employee of wages or other compensation that the employer knows is owed to the employee, the employer may be guilty of grand theft. Common types of compensation include wages and overtime pay, but an employer may also be liable under AB 1003 for failure to provide employees meal and rest periods.

AB 1003 further defines that “grand theft,” as used here, constitutes the taking of Nine Hundred Fifty Dollars ($950) from one employee, or Two Thousand Three Hundred Fifty Dollars ($2,350) in aggregate from two or more employees in a consecutive 12-month period. As an example, if Employee A over the course of 12 months had not been paid over $950 in overtime pay, and the employer intentionally withheld payment thereto, an employer may be liable for grand theft under AB 1003. As another example, if over a 12-month period, Employees B, C, and D all have not been paid $800 in regular pay, the aggregate amount of $2,400 would render the employer liable for grand theft. In sum, if an employer intentionally commits wage theft by depriving one employee of over $950 in earned compensation, or multiple employees of over $2,400 in aggregate of earned compensation, the employer is guilty of grand theft under the penal code.

While no employer wishes to face the prospect of criminal liability, there are ways to protect yourself against potential liability. Compliance with all relevant California wage and hour laws will help mitigate against claims under AB 1003. Ferber Law is here to help ensure your company is in compliance with California wage and hour laws.