HOUSE BILL REPORT

EHB 2788

BYRepresentatives Jones, Smith, Vekich, Wolfe, Cole, Walker, R. King, Prentice and O'Brien; by request of Department of Labor and Industries

Authorizing civil penalties for violations of state wage payment laws.

House Committe on Commerce & Labor

Majority Report:  Do pass. (11)

      Signed by Representatives Vekich, Chair; Cole, Vice Chair; Smith, Ranking Republican Member; Forner, Jones, R. King, Leonard, O'Brien, Prentice, Walker and Wolfe.

House Staff:Chris Cordes (786-7117)

AS PASSED HOUSE FEBRUARY 7, 1990

BACKGROUND:

If an employer pays wages at less than the state minimum wage, fails to keep required records, hinders an investigation for enforcing the state minimum wage, or otherwise violates the state minimum wage law, the employer is guilty, upon conviction, of a gross misdemeanor.  It is a misdemeanor if the employer fails to pay wages due upon termination of the employee's job, takes unlawful deductions from an employee's wages, or violates wage bond requirements.  There are no provisions for civil penalties for violations of these laws.

SUMMARY:

In lieu of criminal penalties, an employer that violates any provision of the state minimum wage law, fails to pay wages due upon termination of the job, takes unlawful deductions from an employee's wages, or violates wage bond requirements may be subject to a civil penalty of not less than $1,000 or 20 percent of the wage violation, whichever is greater, and interest of up to 1.5 percent per month for wages owed.  The penalty may be imposed after the employer is given notice of: (1) the violation, (2) the law violated, (3) a statement of the penalty to be imposed, and (4) information about the employer's right to a hearing.

Any person aggrieved by an action of the Department of Labor and Industries in enforcing the minimum wage law or wage collection law may appeal to the director.  After a hearing, the director must issue a final order, which may be appealed to superior court in accordance with the Administrative Procedure Act.

The department may seek the criminal penalties only for serious or repeated violations.  It is a serious violation if an employer willfully and knowingly withholds wages or withholds wages of more than $10,000 from one employee or $25,000 from five or more employees.

Fiscal Note:      Requested January 24, 1990.

House Committee ‑ Testified For:    Mark McDermott, Department of Labor and Industries; Mike Redman, Washington Association of Prosecuting Attorneys; and Cindy Zehnder, Joint Council of Teamsters.

House Committee - Testified Against:      Bob Seeber, Restaurant Association of Washington; and Clif Finch, Association of Washington Business.

House Committee - Testimony For:    The minimum wage law cannot be effectively enforced when the only penalty is a criminal penalty.  For many of the violations, it does not make sense to ask a prosecutor to bring a criminal action.  Civil sanctions will provide the necessary deterrent.

House Committee - Testimony Against:      The criminal penalty should be removed from the law if civil penalties are being enacted.  The proposed civil penalties are very high.  There are other reforms that are also needed in the minimum wage law, such as tip credit and updating the application of the overtime law.  A package of reforms addressing problems for both employers and employees could be supported.