On October 10, 2019, Governor Gavin Newsom signed AB 673 into law, expanding an employee’s right to collect penalties for an employer’s failure to timely pay wages.

Prior to the enactment of AB 673, Labor Code section 210 provided a penalty that was directly recoverable by the Labor Commissioner or by an employee authorized to bring a claim under California’s Private Attorneys’ General Act (PAGA). A recovery by the Labor Commissioner resulted in the penalties being paid directly to the State Treasury and California’s Labor and Workforce Development Agency (LWDA). A recovery by an employee under PAGA resulted in the employees (and their attorneys) keeping 25 percent of the penalty, with the remaining 75 percent being paid to the LWDA. The penalties are $100 for each initial violation, $200 for each subsequent violation, plus 25 percent of the withheld wages.

Pursuant to AB 673, employees are now authorized to recover these penalties as part of a claim filed with the Labor Commissioner to recover unpaid wages or in civil court complaint filed under PAGA, but not both.  The Labor Commissioner is no longer authorized to collect these penalties in an independent civil action.  While the amounts of the penalties remain the same, AB 673 removes the requirement that the penalties recovered by the Labor Commissioner be paid to the LWDA and State Treasury.

With the signing of AB 673 employers may experience an increase in claims filed with the Labor Commissioner seeking unpaid wages and these statutory penalties.