Understanding California’s new wage theft law

On Behalf of | Jan 4, 2022 | employment law

Certainly, no responsible employer intentionally withholds wages from their employees. However, mistakes happen. Sometimes there are accounting errors. Other times, it’s a lack of awareness of the laws. 

Intentionally failing to pay employees what they’re owed under the law is a serious offense – and it got more serious as of Jan. 1. Effective on the first day of 2022, California employers can be charged with the criminal offense of grand theft for intentionally withholding a significant amount of money from employees.

When does wage theft become grand theft?

Wage theft is the “intentional deprivation of wages…gratuities…benefits or other compensation, by unlawful means, with the knowledge that the…compensation is due to the employee under the law.” Under the new law, Assembly Bill (AB) 1003, an employer has committed grand theft if they intentionally withhold more than $950 from a single employee or more than $2,350 from two or more employees over 12 months. 

Businesses can be ordered to pay restitution of the amount in question to their employees. Employees and the California Labor Commissioner are also free to file a civil lawsuit against the business. Note that the law applies to the payment of independent contractors as well as employees of a company.

The best way for a business to avoid allegations of wage theft is for all of the necessary people in your company to know and follow the law. It’s also important to respond to employee questions or accusations of wage and hour violations rather than leaving them to believe they have no choice but to take the matter to authorities. If you have questions about the new law or find yourself facing accusations of wage theft, it’s wise to seek legal advice.