California has adopted a host of new labor and employment laws that will become effective on January 1, 2022. One such new employment law can be found in the California Penal Code. Assembly Bill (“AB”) 1003 adds section 487(m) to the California Penal Code where “grand theft” will be defined to include intentional theft of wages, including gratuities, in excess of $950 from any single employee, or $2,350 in the aggregate from two or more employees.

According to the California Department of Industrial Relations, wage theft is a form of fraud and occurs when employers do no pay workers according to the law. Examples of wage theft include paying less than minimum wage, not paying workers overtime, not allowing workers to take meal and rest breaks, requiring off-the clock work, or taking workers’ tips.

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

Further, AB 1003 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.

Lastly, the bill states 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, section 487. Employers and all hiring entities of independent contractors should ensure their compensation policies and procedures are compliant with the law.