New California Bill to Put Three-year Time Limit on Claims for Liquidated Damages Stemming from Failure to Pay Minimum Wage

Last July 1, California’s minimum wage rate was set to $9.00, the first increase since 2008, when the state’s hourly rate went from $7.50 per hour to $8.00 per hour. By 2016, it is again expected to increase by a dollar, making it $10.00 per hour. Pursuant of the new changes in the labor laws in California, non-exempt employees must be paid at least the current minimum wage rate. Otherwise, they are entitled to file wage claims, which would allow them to recover from their employers the difference of what they were paid and what they should have been earning at the minimum wage rate.

Apart from the unpaid difference wages and other penalties that employees may be able to recover from their employers, they are likewise entitled to claim what is called liquidated damages. Under the California Labor Code Section 1194.2(a), liquidated damages comprises of an amount that is equal to the wages that were unlawfully unpaid to them, including the interest. In other words, if an individual recovers x dollars of unpaid wages, he or she may likewise obtain the same value in liquidated damages.

Workers, however, should be aware of the statute of limitations that is applied in filing claims for unpaid wages. Under California law, individuals are allowed to file wage claims for unpaid wages within a time limit of three years. But then, even though they are entitled to file claims for liquidated damages, there is no time limit for it under the aforementioned Labor Code section. How can it be possible, then, for workers to file such claims if there is no statute of limitations in place?

Enter the Assembly Bill 2074, which was introduced by Assemblyman Roger Hernandez (D-West Covina) earlier this year. Last August 4, the California Senate passed the bill via a 25-10 vote, and is now awaiting Governor Edmund “Jerry” Brown’s signature.

If passed into law, it would effectively amend the California Labor Code Section 1194.2 (a), allowing for workers seeking claims for liquidated damages to file a suit “at any time before the expiration of the statute of limitations on an action for wages from which the liquidated damages arise.” Thus, non-exempt workers can file their claims liquidated damages within the existing three-year statute of limitations.

Meanwhile, every Los Angeles labor lawyer sees this proposed bill as another great addition to the California Labor Code, provided that it is passed through Governor Brown’s signature. Assuming that the bill would amend the state’s labor laws this year, employees with minimum wage issues with their employers today can file their claims as late as three years from now, in 2017. Upon the bill’s passage, employers must ensure that they adhere with the changes or risk facing claims from their aggrieved employees.