AB 1003 Creates a New Offense for the Intentional Theft of Wages by an Employer

On September 27, 2021, Governor Gavin Newsom signed into law Assembly Bill 1003 by Assemblywoman Lorena Gonzalez (D-San Diego), relating to wage theft. AB 1003 adds Section 487m to the California Penal Code to specify criminal penalties for wage theft by an employer.

Section One of the bill specifies that the intentional theft of wages in an amount above $950 from any single employee, or $2,350 in the aggregate from two or more employees, by an employer in any consecutive 12-month period may be punished as grand theft under state law.

The new law defines the phrase “theft of wages” as the “intentional deprivation of wages, gratuities, benefits, or other compensation by unlawful means and with the knowledge that the wages, gratuities, benefits, or other compensation is due to the employee. Under this new provision of the Penal Code, the term “employee” includes an independent contractor. The term “employer” includes the hiring entity of an independent contractor.

In addition, this new criminal law provides that the wages, gratuities, benefits, or other compensation may be recovered as restitution, but the new provision of law does not prohibit the employee or the Labor Commissioner from commencing a civil action to seek remedies provided for under the Labor Code.

Finally, the bill specifies that this new section of the Penal Code does not constitute a change in, and does not expand or limit the scope of conduct prohibited by Penal Code Section 487. The law takes effective on January 1, 2022.