Employers of all sizes, potentially including individual owners, managers and executives, should be aware of heavier penalties or jail time for engaging in wage theft. According to the California Labor Commissioner’s Office, wage theft occurs anytime an employer does not pay workers what they are owed by law.

California’s Governor signed Assembly Bill 1003 (AB 1003), which creates a new type of grand theft for the intentional theft of wages in an amount greater than $950 from any one employee, or $2,350 in the aggregate from two or more employees by an employer in any consecutive 12-month period. Following the trend of other recently passed laws broadening the scope of legal protections for workers, this legislation includes independent contractors within the meaning of employee. Therefore, hiring entities of independent contractors would face the same penalties or jail time for engaging in wage theft.

The new legislation allows wages, tips, or other compensation that are the subject of a prosecution to be recovered as restitution. Under existing law, grand theft is punishable either as a misdemeanor by imprisonment in a county jail for up to 1 year or as a felony by imprisonment in county jail for 16 months or 2 or 3 years, by a specified fine, or by a fine and that imprisonment.

All employers and hiring entities of independent contractors should work to ensure their compensation policies and practices are fully compliant with existing laws.